US expansion helps Uniqlo to another record profit

Tokyo — The Japanese owner of global clothing brand Uniqlo on Thursday reported a record-high profit for the year ended August, and forecast a fifth-straight year of record profit in fiscal 2026 on its aggressive expansion in North America and Europe.

Fast Retailing said operating profit jumped about 13% to ¥564.3bn ($3.69bn) in the 12 months ended August 31 from the year before, beating expectations.

The retailer, known for its fleece jackets and inexpensive basics, reported strong domestic sales and robust results in the US that compensated for higher tariffs.

Revenue in Japan was boosted by buoyant sales to tourists, while the international segment posted record performance, with North America revenue and business profit growing 24.5% and 35.1%, respectively, for the fiscal year ended August 2025.

But its Greater China market continued to struggle, with declines in sales and profits as consumer appetite stayed subdued amid a sluggish economy and weak consumer confidence.

Growth in North America and Europe

The casual-wear giant said operating profit beat its own forecast of ¥545bn and an average estimate of ¥546bn from 16 analysts polled by LSEG.

Fast Retailing forecast operating profit in the year to August 2026 would rise to another record of ¥610bn.

From one store in Hiroshima in western Japan 41 years ago, Uniqlo has grown to more than 2,500 locations across the world, selling clothing made primarily in China and other Asian manufacturing hubs.

When its operations in China suffered during strict Covid-19 curbs, Fast Retailing increased its focus on markets in North America and Europe.

Now, with China’s economy cooling, it has doubled down on that strategy, looking to North America and Europe for growth. China remains the retailer’s biggest overseas consumer market with about 900 Uniqlo stores on the mainland.

“The global economy is now in a critical state, with many companies pessimistic about the future and increasingly reluctant to make proactive investments,” founder and CEO Tadashi Yanai said at a briefing.

“It is precisely during such times of stagnation that chances arise to create something new.”

Fast Retailing surpassed ¥1-trillion in sales in Japan for the first time in the just finished year. It now aims to hit that sales mark in both the US and Europe “in the near future,” though doing so would be multiples of current revenue levels.

The company said it planned to open flagship stores in locations such as Frankfurt, Warsaw, Chicago and San Francisco in fiscal 2026.

Tariffs equal confrontation

But its global strategy has been complicated by tariffs imposed by the administration of US President Donald Trump.

Fast Retailing warned in July that the tariffs would start to have a significant effect on its operations in the market later in the year. Even so, price increases and cost-cutting helped the company increase US sales and profit for the year.

Tokyo and Washington later inked a deal to set a 15% tariff on most Japanese imports, less than the 25% initially imposed.

It is uncertain how that affects Uniqlo goods sold in the US, which are primarily produced in South and Southeast Asia.

Yanai repeated his criticism of the US tariff regime. “Imposing tariffs is a type of confrontation,” he said. “If mishandled, it could potentially lead to war.”

Fast Retailing tends to benefit both at home and abroad from a weak yen, which is now trading at the lowest level since February against the dollar and a record low versus the euro.

A tourism boom in Japan has led to a surge in duty-free shopping at domestic stores, while revenue from Western markets gets an added boost when translated back into yen.

Yanai, Japan’s richest man, has long aimed to make his firm the world’s biggest fashion retailer, with Zara owner Inditex and H&M standing in the way.

In recent years, the company has faced fierce price competition from Chinese online retailers Shein and Temu.

Reuters