Uniqlo owner Fast Retailing Co. expects full-year profit will hit a record as a weaker yen and strong sales globally outweighed a China slump due to Covid Zero lockdowns.

The Asian retailer raised its full-year operating forecast to 290 billion yen ($2.1 billion) from an earlier estimate of 270 billion, according to a statement on Thursday. That topped analyst projections and, if achieved, would beat the previous record set in 2019.

The outlook was aided by robust quarterly earnings, with operating profit in the three months ended May 31 climbing to 81.81 billion yen, beating analysts’ average projection of 67 billion yen.

A slump in the yen, which just hit a fresh 24-year low against the dollar, is helping the company’s bottom line and the currency’s moves are likely to impact results across multiple sectors as earnings season ramps up.

The weaker currency is boosting the income the company brings back home and also prompted Fast Retailing in June to announce its fleece and down jackets would see their first price hike in years, to accommodate the rising costs of transport and materials that had been exacerbated by the yen’s decline.

With the war in Ukraine and a Covid resurgence in China fuelling uncertainty about clothing sales across the world, Fast Retailing is shifting its focus to markets where the business outlook is relatively stable. In April, the company said it’s doubling down on the North American market, where it has struggled to reach the same scale of success seen in Japan and China, targeting 200 Uniqlo stores in five years from 57 currently.

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For the third quarter, profit was driven by a robust performance at Uniqlo operations in parts of Asia, North America and Europe, excluding Russia. That countered a large decline in revenue in the greater China region, which was hurt by Covid restrictions.

Sales have exceeded pre-pandemic levels in the US, Europe excluding Russia, as well as in Malaysia, the Philippines, Indonesia and Singapore, chief financial officer Takeshi Okazaki said at a briefing. Revenue in China started recovering in June, after lockdowns were lifted ,he said.

The stock has advanced more than 7 percent this year, while the benchmark Topix Index has dropped about 5 percent.

By Kanoko Matsuyama

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