Slide 1: Fast Retailing first quarter fiscal 2018 results presentation
I am Takeshi Okazaki, Group Executive Vice President and CFO at Fast Retailing. I would like to talk to you today about our consolidated business performance for the first quarter of fiscal 2018, or the three months from September through November 2017, and our estimates for the full business year t
Slide 2: Contents
\ ST RETAILING Contents I. Results Sep.—Nov. 2017 (1Q) P3~P18 II. Estimates for Fiscal 2018 P19~P21 Ill. Reference P22~P24 Disclosure of Corporate Performance Following the Group’s adoption of International Financial Reporting Standards (IFRS) from the year ending August 31, 2014, all data in this d
Slide 3: First quarter fiscal 2018 consolidated results
In the first quarter of fiscal 2018, the Fast Retailing Group reported a higher-than- expected year-on-year rise in both revenue and profit. Revenue totalled ¥617.0 billion (up 16.7% year on year). On the profit side, business profit (revenue minus cost of sales and SG&A expenses), which is a good i
Slide 4: Main factors affecting first-quarter consolidated profit
I would like to look in more detail at the main factors affecting first-quarter consolidated profit. Given its increasing impact on consolidated results, our low- priced GU casual fashion brand has been separated into its own individual business segment from FY2018. Consolidated revenue expanded by
Slide 5: Finance income and costs
Moving on to finance income and costs, we reported a net finance income of ¥3.9 billion in the first quarter of fiscal 2018 after the weaker Japanese yen rate at the end of November inflated the value of our foreign-currency denominated assets in yen terms. As a result, profit before income taxes in
Slide 6: Performance by Group operation
Slide 6 displays the breakdown of performance by Group operation. I will explain factors affecting each individual business segment in more detail in the subsequent slides.
Slide 7: UNIQLO Japan revenue and profit
UNIQLO Japan reported considerably higher-than-expected year-on-year gains in both revenue and profit in the first quarter. Revenue increased by 7.6% to ¥257.0 billion and operating profit expanded by 18.6% to ¥54.1 billion.
Slide 8: UNIQLO Japan same-store sales
At UNIQLO Japan, same-store sales, including online sales, rose 8.4% year on year in the first quarter, which was well above plan. This strong performance was thanks to firm demand and ample inventory of UNIQLO flagship Fall Winter ranges such as HEATTECH, down coats, sweat wear and merino sweaters.
Slide 9: UNIQLO Japan gross profit margin
Turning now to business margins for UNIQLO Japan, the gross profit to revenue ratio, or gross profit margin, decreased by 0.2 point year on year in the first quarter of fiscal 2018 to 50.9%. That result was roughly in line with target. This contraction in the gross profit margin was due largely to r
Slide 10: UNIQLO Japan SG&A expense ratio
UNIQLO Japan’s selling, general and administrative expenses ratio contracted 1.7 points year on year to 30.1% in the first quarter of fiscal 2018. Despite higher-than-expected sales levels, we were able to reduce expenses by a greater extent than originally forecast in monetary terms as well. The mo
Slide 11: UNIQLO International results
I would now like to move on to explain the first-quarter results for UNIQLO’s global operations. The UNIQLO International segment exceeded expectations, reporting significant gains in both revenue and profit. UNIQLO International revenue rose 31.4% year on year to ¥258.2 billion and operating profit
Slide 12: UNIQLO International regional trends: Greater China
Next, I would like to look at business trends for individual regions within the UNIQLO International segment. Greater China, which spans the region encompassing Mainland China, Hong Kong and Taiwan, reported significant gains in both revenue and profit in the first quarter. While the rise in revenue
Slide 13: UNIQLO Southeast Asia & Oceania and USA
UNIQLO Southeast Asia & Oceania exceeded expectations to report large gains in both revenue and profit in the first quarter of FY2018. The Southeast Asian region reported especially strong sales, and achieved double-digit growth in same-store sales. Sales of Summer items proved strong in the year- r
Slide 14: GU segment results
Moving onto the GU segment, GU reported a rise in both revenue and profit in the first quarter, with revenue increasing by 5.6% to ¥60.8 billion, and operating profit expanding by 31.8% to ¥9.0 billion. While revenue fell short of target, the operating profit figure was higher than expected. Breakin
Slide 15: Global Brands results
Moving on next to our Global Brands operation, which reported rising revenue and profit in the first quarter. Revenue expanded by 13.8% year on year to ¥40.0 billion and operating profit increased by 10.4% to ¥3.0 billion. Both the revenue and profit figures were roughly in line with expectations. O
Slide 16: Balance sheet as of end November 2017
Next, I would like to take you through our balance sheet as it stood at the end of November 2017. Compared to the end of November 2016, total assets increased by ¥222.1 billion to ¥1.6330 trillion. Total liabilities increased by ¥117.9 billion to ¥790.0 billion. Total equity increased by ¥104.1 bill
Slide 17: Current assets, inventories and derivatives
Let’s look first at the ¥199.6 billion increase in current assets at the end of November 2017. The balance of cash and cash equivalents increased by ¥323.2 billion year on year to ¥788.8 billion, due to an increase in operating cash flow and drawdown in deposits of over three months maturity. Other
Slide 18: Cash flow
Looking briefly at our cash flow position for the first quarter of fiscal 2018. We enjoyed a significant net cash inflow of ¥120.0 billion from operating activities. As a result, the balance of cash and cash equivalents stood at ¥788.8 billion at the end of November 2017.
Slide 19: Group estimates for fiscal 2018
Slide 19 explains our estimates for Fast Retailing Group performance for the 2018 financial year, or the twelve months to August 2018. Consolidated performance exceeded expectations in the first quarter from September to November 2017 thanks to strong results from both UNIQLO Japan and UNIQLO Intern
Slide 20: Expected FY2018 performance: UNIQLO International
I would like to go over expected FY2018 performance by Group operation. Looking at UNIQLO International first. UNIQLO International’s performance in the first quarter was stronger than expected in terms of both revenue and profit gains. We maintain our forecast for large gains in UNIQLO Internationa
Slide 21: Expected FY2018 performance: GU and Global Brands
GU generated lower-than-expected revenue but higher-than-expected operating profit in the first quarter of FY2018. However, we expect to achieve our initial forecasts for a rise in full-year revenue and profit by controlling discounting and cutting business expenses. Of note, GU December same-store
Slide 22: Reference: Group Company Store Numbers
‘ vem eference: Group Company Store Numbers Fi > [Units: Stores] UNIQLO Operations UNIQLO Japan Own stores Large-scale Standard and others Franchise stores UNIQLO International Mainland China Hong Kong Taiwan Korea Singapore Malaysia Thailand Philippines Indonesia Australia Russia Germany Belgium Sp
Slide 23: Reference: Foreign Exchange Rates
‘ Fi > caewune Reference: Foreign Exchange Rates Exchange rates used in consolidated accounts Yen 1USD | 1EUR | 1GBP | 1RMB /100KRW| FY20171Q 3-month average to Nov. 2016 103.0 | 114.4 | 131.2 15.3 9.2 FY2017 12-month average to Aug. 2017 | 110.1 120.7 139.7 16.1 9.7 Exchange rates used on balance s
Slide 24: Reference: Capital Expenditure, Depreciation
Zraeteeference: Capital Expenditure, Depreciation Capex (Incl. Finance Leases) and Depreciation Billions of Yen Capital spending UNIQLO UNIQLO Global | Systems, Depreciation Japan Intl. cu Brands te Total FY2017_ 1Q3 months 2.2 45 1.3 0.5 6.1 14.8 8.5 FY2017 —‘Full-year 12 months 6.6 24.3 7.6 2.9 18