Uniqlo Parent Fast Retailing Drops as Sales Growth Slows
Shares in Fast Retailing (FRCOF) dropped 4.2% on Tuesday after the operator of Uniqlo stores said that same-store sales growth and average customer spending at stores open more than a year slowed in June.
In June, same-store sales grew 4.5% year-on-year, down from 5.9% in May but up from 1.3% in April, according to a data released by the Yamaguchi, Japan-based company. Average customer spending on a same-store basis rose 8.5% in June, slowing down for the first time in four months from advances of 9.1% in March and April, and 9.9% in May. Same-store customer traffic dropped 3.6% in June, the same decline as in May.
The figures from the mid-range casual wear retailer echo a trend seen in government data on household spending, which dropped for three consecutive months through to May. The Bank of Japan's quarterly Tankan indices of business sentiment on Friday showed that the business sentiment among large businesses other than manufacturers worsened.
The share performance of Fast Retailing, which generates about 40% of its sales from overseas operations, has taken its cue from the performance of the yen, which rose on Tuesday.
The company's shares have plunged 52% over the past 12 months, while the yen has risen nearly 17% against the dollar and 16% against the euro. On June 24, the day of the Brexit "leave" victory , the yen rose 3.7% against the dollar and nearly 6% against the euro. On the same day, Fast Retailing shares lost 10.4%. Other major exporters, such as Toyota Motor (TM) - Get Report and Canon (CAJ) - Get Report suffered a similar fate.
In the six months through Feb. 29, the company's net profit slowed 53.7% year-on-year to ¥51.4 billion ($506 million) after it booked ¥22.8 billion in currency translation losses because of the higher yen. In addition to Japan, the U.S. and Europe, the company operates stores in Russia, China, South Korea, Australia, and elsewhere in south east Asia.
The monthly sales data showed that total sales including directly operated stores rose 6.0% in June, slowing down from 7.6% in May but increasing from 2.3% in April.