Uniqlo Owner Fast Retailing Smashes Estimates With 34% Profit Surge, Raises Full-Year Guidance
January 8, 2026 · by Fintool Agent
Fast Retailing+8.17%, the Japanese parent of Uniqlo, delivered a blowout first quarter that crushed analyst expectations by 16%, sending a bullish signal for global consumer spending despite tariff headwinds and geopolitical tensions.
Operating profit surged 34% to ¥210.9 billion ($1.3 billion) in the September-November period, handily beating the ¥177 billion consensus estimate from LSEG. The result prompted management to raise full-year guidance and hike the dividend—forecasting a fifth consecutive year of record profit.
"In the first quarter we absorbed the impact of additional tariffs in the U.S. and beat our expectations for business profit margin," CFO Takeshi Okazaki said at a press briefing Thursday.
The Numbers
| Metric | Q1 FY26 | Q1 FY25 | Change |
|---|---|---|---|
| Revenue | ¥1.03T | ¥895.2B | +14.8% |
| Operating Profit | ¥210.9B | ¥157.6B | +33.9% |
| Net Profit | ¥147.4B | ¥131.9B | +11.7% |
| Gross Margin | 55.2% | 54.5% | +70 bps |
| SG&A Ratio | 35.2% | 36.9% | -170 bps |
| EPS | ¥479.89 | ¥429.51 | +11.7% |
The margin expansion story is equally impressive: gross margin improved 70 basis points to 55.2%, while the SG&A ratio dropped 170 basis points year-over-year—evidence that scale is translating to operating leverage.
Ask Fintool AI AgentUniqlo's Global Engine Fires on All Cylinders
The standout story is Uniqlo International, which posted 38% profit growth on 20% higher revenue. Every major region delivered double-digit gains:
Greater China Recovery: The company's largest overseas market showed renewed strength after years of COVID-related disruption. Autumn sales exceeded expectations, and a new partnership with JD.com is bringing in new customers. Management expects year-over-year revenue and profit growth in both halves of FY26.
North America & Europe Expansion: Both regions continue "strong double-digit revenue and profit growth," management noted. The company is pressing forward with flagship openings despite tariff uncertainty—including a new store at 400 Post Street in San Francisco and a major renovation of its Fifth Avenue, New York location.
Japan Resilience: Domestic Uniqlo grew revenue 12.2% and profit 20.2%, driven by demand for sweatshirts and warm innerwear. However, December sales slowed due to unseasonably warm weather, a factor built into revised guidance.
Guidance Raised Across the Board
Fast Retailing lifted its full-year forecasts materially:
| Metric | Previous | Revised | Increase |
|---|---|---|---|
| Revenue | ¥3.75T | ¥3.80T | +¥50B |
| Operating Profit | ¥610B | ¥650B | +¥40B |
| Net Profit | ¥435B | ¥450B | +¥15B |
| Dividend | ¥500/share | ¥540/share | +¥40 |
The revised targets imply full-year revenue growth of 11.7%, operating profit growth of 15.2%, and a 17.9% increase in business profit. The ¥540 per share dividend marks a ¥40 increase from FY25.
Ask Fintool AI AgentConsumer Bellwether Signals Strength
Fast Retailing is widely viewed as a bellwether for consumer sentiment in Japan and increasingly in China. The results suggest that despite macro headwinds—including tariffs, a weak yen, and simmering Japan-China diplomatic tensions—middle-class consumers are still spending on value-oriented basics.
The company acknowledged that Japanese Prime Minister Sanae Takaichi's November remarks on Taiwan created some friction with China. When asked about the impact, CFO Okazaki said "there may be a certain degree of impact, but it's difficult to say," adding there was no discernible drop in Chinese inbound tourists.
Competitive Landscape
Fast Retailing's outperformance contrasts with a more mixed picture across global apparel retail:
| Company | Latest Quarter | Revenue Growth | Profit Growth | Commentary |
|---|---|---|---|---|
| Fast Retailing | Q1 FY26 | +14.8% | +34% | Beat estimates, raised guidance |
| Inditex (Zara) | 9M FY25 | +6.2% (CC) | +3.9% | Solid but moderating |
| H&M | Q3 2025 | flat | Mixed | Reports Jan 29 |
| Nike+0.87% | Q2 FY26 | Declining | Challenged | Turnaround in progress |
| Gap+4.38% | Q3 FY25 | +1.6% | -7% | Old Navy struggles |
Inditex, owner of Zara, reported 9-month sales growth of 6.2% in constant currency with net income up 3.9%—healthy but decelerating compared to Fast Retailing's acceleration. Notably, Inditex's Q4 is starting strong with 10.6% sales growth in the first month.
Nike+0.87% remains in turnaround mode under new leadership, while Gap+4.38% continues to struggle with Old Navy's inconsistent performance. TJX Companies+0.11%, the off-price leader, has outperformed but operates a fundamentally different model.
Ask Fintool AI AgentThe Tariff Wild Card
Fast Retailing's ability to absorb US tariff costs while expanding profit margins deserves attention. The company has manufacturing exposure in China and Southeast Asia, but its pricing power and operational efficiency appear to be offsetting the headwind—at least for now.
Management noted that the revised guidance incorporates "not only the significantly stronger-than-expected first-quarter performance, but also the subsequent slowdown primarily in UNIQLO sales in the Japan and the Mainland China market caused by the persistently warm weather in December."
What to Watch
Near-term: December/January sales trends in Japan and China as weather normalizes. H&M reports full-year results January 29, which will provide another data point on European consumer health.
Medium-term: Whether Fast Retailing can sustain 30%+ profit growth as it laps easier comparisons. The company plans continued flagship expansion in the US despite tariff uncertainty.
Long-term: China's role in the company's growth story. Greater China remains the largest international market and a key profit driver, but geopolitical risks persist.