Why Did Uniqlo's Parent Company Successfully Turn a Profit in Korea?

A notice regarding the closure is posted at the Seoul Uniqlo Gangnam store, which closed last year. Photo by Yonhap News

[Asia Economy Reporter Suyeon Woo] Fast Retailing, the parent company of Japanese fast fashion (SPA) brand Uniqlo, posted operating profit in the last quarter that nearly matched its record high. In particular, in South Korea, the company succeeded in turning a profit by downsizing, such as closing unprofitable stores and reducing selling and administrative expenses.

According to Bloomberg on the 14th, Fast Retailing's operating profit for the first quarter of fiscal year 2021 (September to November last year) was approximately 113.1 billion yen (about 1.1919 trillion KRW), an increase of 23.3% compared to the same period last year.

This figure exceeded market consensus and was close to the record high of 113.9 billion yen set two years ago for quarterly operating profit. However, sales during the same period decreased by about 0.6% to 619.7 billion yen compared to the same period last year.

Fast Retailing explained that the strong performance was due to significant profits from Japan and the Greater China region (China, Hong Kong, Taiwan), as well as results from Uniqlo’s sister brand GU. They also added that the elimination of losses and successful turnaround to profitability in South Korea contributed to the profit increase.

By brand, 'Uniqlo Japan' recorded the highest operating profit of 60 billion yen, a 55% increase compared to the same period last year. 'Uniqlo International,' responsible for South Korea and China, posted operating profit of 41.4 billion yen, a modest 9.5% increase.

A Fast Retailing official explained, "Although sales in the Korean market sharply declined, we were able to turn a profit by closing unprofitable stores, strengthening expenditure controls, and managing selling and administrative expenses and gross profit margin."

This content was produced with the assistance of AI translation services.