New Delhi

Casual wear giant Uniqlo, owned by the Japanese, is projected to beat its own forecast in what would be a third successive year of record profits because of its increasing brand strength in the West and a rebound in business in China.

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With an average of 15 analyst estimates compiled by LSEG before the Japanese company reports its earnings on Thursday, Fast Retailing's operating profit probably rose 24 per cent in the 12 months to August to 478.3 billion yen.

That's slightly above the company's 475 billion yen forecast, which it lifted in July, citing a strong performance in the second half.

Fast Retailing's stock has surged to all-time highs this week. Going forward, key factors will include the sales of fall and winter products in Japan, and whether it can breathe new life into its business in China, independent analyst Mark Chadwick says.

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"Investor attention will turn to whether Fast Retailing's measures in Greater China successfully reverse the earnings decline caused by weak consumer sentiment and increased competition," Chadwick wrote on the Smartkarma platform.

With more than 900 stores in China, Fast Retailing has long been considered a bellwether for the retail industry in the world's second-largest economy. For years, COVID restrictions had weighed on results there, but now it's a slowing economy that is dampening consumer confidence.

Greater China CEO Pan Ning acknowledged in July that the market is maturing; as a measure, the company is adopting a scrap-and-build strategy, scaling back the store openings and focusing more on underperforming locations.

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As Chinese sales were hit by lockdowns due to COVID-19, the company diverted its focus toward expansion in North America and Europe. The regions have reported strong sales and profit in the first nine months of fiscal 2024.

Tadashi Yanai, the founder, aims to make Fast Retailing the largest fashion retailer in the world, with Zara and H&M being the closest competitors. He believes that a world post-COVID is much more value-oriented than luxury-oriented and that such market advantage will favour Uniqlo.

Yanai, Japan's richest man, is scheduled to speak at the company's earnings briefing on Thursday, along with Uniqlo president Daisuke Tsukagoshi, whom Yanai has mentioned as his possible successor.

Fast Retailing shares have leapt 43 per cent this year so far, outperforming a 16 per cent advance in the benchmark Nikkei index.