Wednesday 13 January 2016

Fast Retailing report Q1 2016

Fast Retailing, Q1, 2016, front page

The Japanese retail chain Fast Retailing arrived already with their Q1 report for 2016. The reason for this is due to that they are running a broken accounting year. I missed the direct impact of the share price upon the release of it but in general the share price has been dropping lately.

For the report in full please go here and to find out more concerning Fast Retailing then please visit analysis of Fast Retailing.

When reading the report it becomes very clear that the Japanese market is saturated concerning the Uniqlo brand. They closed eight stores and converted ten stores into employee-franchise outlets. Right now I do not know what to think about the franchise business. Uniqlo had, like many of the other retailers, problems due to the warm autumn which caused less sale of winter cloths and they were even forced to make sales which caused lowered margins. They have already after the first quarter decreased their forecasts for the full year so... no wonder the share price have dropped.

If we take a look at the income statement then we see that they have managed to push up the revenue by around 8% but cost of sales were up by 12% which means that the earnings compared to the same quarter in 2015 are down by around -28%. So pretty bad to say the least. I thought that they would be highly influenced by currency effects but from what I could see it was not that dramatic.

Fast Retailing, Q1, 2016, income statement

Conclusion: Fast Retailing did not have a good start of the year which have forced them to decrease their forecasts. From my point of view I do not care very much about this dip since what I care about is the amount of people walking into the store and coming out with an Uniqlo bag and I still see that so I will still remain as a shareholder.

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