July 8, 2020 / 10:11 AM / a month ago

Uniqlo June sales seen strong, taking edge off pandemic woes

FILE PHOTO: Women wearing face masks, following the coronavirus disease (COVID-19) outbreak, walk past a store of the Fast Retailing's fashion chain Uniqlo, at a shopping complex in Beijing, China May 24, 2020. REUTERS/Florence Lo/File Photo GLOBAL BUSINESS WEEK AHEAD

TOKYO (Reuters) - Japanese casual clothing chain Uniqlo is likely to report strong same-store sales for June, taking the edge off a profit plunge for owner Fast Retailing Co (9983.T) due to store closures and weak demand amid the coronavirus pandemic.

Fast Retailing is scheduled to announce March-May financial results and June domestic sales on Thursday. Analysts expect quarterly operating profit to slump around 90% year-on-year to 6.26 billion yen ($58.19 million), according to Refinitiv.

For June, JP Morgan analyst Dairo Murata forecast a 20%–30% jump in domestic same-store sales, helped by demand for the company’s Airism face masks, which sold out quickly after going on sale that month. Japan began lifting pandemic lockdown measures in late May.

Such a rise, following declines of 57% in April and 18% in May, would be the strongest sign yet of the business recovering, at least in its home market. Stores in China, a key growth market, have also reopened and people are shopping again.

“We estimate a 3% sales boost from the Airism facemasks ... and these facemasks have also been highly effective in attracting consumers to stores,” Murata said in a research note dated June 29.

While strong June sales may also highlight the company’s relative strength among global fast-fashion peers, helped by its focus on practical clothes and strength in Asian markets, it may be too early to say the worst is past.

Some analysts warned that a bounce in June was likely driven by pent-up demand from consumers cooped up at home in previous months, and may be short-lived given the recession ahead.

The company in April forecast sales for the fiscal year ending Aug 31 would fall 9% to 2.09 trillion yen from a year earlier, and operating profit would slump 44% to 145 billion yen.

CEO Tadashi Yanai, who called the pandemic the biggest crisis for humanity since the end of World War Two, has warned that the forecast could be revised further.

Reporting by Ritsuko Ando in Tokyo and Sayantani Ghosh in Singapore; additional reporting by Jasmine I.S. in Bengaluru; Editing by Kim Coghill

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