Tuesday, 12 April 2016

Fast Retailing report Q2 2016

Fast Retailing, Q2, 2016, front page

The Q2 report arrived from Fast Retailing and the reading was not pretty. The share price dropped by a bit over -3% and well... I agree with the market on this one... the report is awful.

For the report in full please go here, to read the previous summary then please click on Fast Retailing report Q1 2016 and to find out more concerning Fast Retailing then please visit analysis of Fast Retailing.

Why do I then claim the report to be bad? Well... the revenue is indeed up so one could rejoice at that but they complained on winter blah, blah, blah which probably means they were forced to make large sales which means much lower margin AND of course gained revenue in the process. To me sales provides a temporary increased revenue and we can also see it via for instance the fact that even though they sold for 1 trillion Yen during the first quarter they only expect to bring in 800 billion during the remainder of their broken accounting year. So... I would every time take LESS increased revenue but with increased margins to this artificial bunk of high revenue. The outlook for the full year is not good in terms of neither total revenue growth nor with the profits coming out which caused them to DECREASE the already announced dividend of 185 YEN to 165 YEN which leaves us shareholders with a similar (if they do not decide to make even more changes later on) dividend to last year. I do not like.

Fast Retailing, Q2, 2016, financial statement

They also made a division into the three segments Uniqlo Japan, Uniqlo International as well as Global Brands and reported the earnings. When I added up the values they did not fit with the reported overall business result. These kind of things makes me a bit edgy and I always start to wonder why? How can you as a large company publish two financial tables next to each other and the values do not fit fully?

Conclusion: Fast Retailing is not having a good time. They are loosing ground on their home market and neither China nor the US are providing revenue and earnings as we would have liked to see. Several of their global brands also ended up in trouble with decreased revenue as well as profits. The last couple of times when I have entered the store neither I nor my wife bought something... We simply did not like what they had to offer. I will remain a very grumpy shareholder at the moment.

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