|A college student holds a one-person protest against Japan, urging a boycott of Japanese products in front of Uniqlo's store in central Seoul on Oct. 24, 2019. / Yonhap|
By Kim Jae-heun
Japanese casual wear brand Uniqlo, wholly owned by Fast Retailing, managed to make a rebound here, but only by shutting down unprofitable stores.
Fast Retailing did not reveal the exact size of its operating profit in Korea. But it said improvements in sales management costs and gross profit margin helped Uniqlo Korea make a turnaround.
"We saw a sharp decline in sales, but we were able to avoid losses by controlling our spending through the closures of loss-making stores," a Fast Retailing official said.
Uniqlo suffered an 88.4 billion won loss between September 2019 and August 2020 due to a consumer-led boycott on Japanese products sold here.
The campaign followed the Japanese government's 2019 regulations on exports of materials needed by Korean firms making semiconductors and display panels after Korea's Supreme Court ordered Japanese firms to compensate surviving South Korean victims of wartime forced labor.
Uniqlo was one of the Japanese companies that was targeted by the anti-Japan boycott campaign. One of the officials at Uniqlo's headquarters provoked public anger that year, when he was quoted as saying, "Koreans are hot-tempered and the boycott will last only a short period of time."
The boycott, however, eventually led to the closures of 22 Uniqlo stores in Korea, including symbolic branches in Myeong-dong and Gangnam last year.
However, an industry source said the number of stores that closed down is not enough to help the Japanese firm rebound.
"I am pretty sure the reason Uniqlo managed to make a profit was because of increased sales from its online business here," the source said. "As people felt uncomfortable visiting Uniqlo stores, they started to purchase clothing online."
Meanwhile, Fast Retailing reported its second-highest operating profit in the first quarter of fiscal year 2021. Earnings during that period stood at around 113.1 billion yen (1.19 trillion won), up 23.3 percent from 91.6 billion yen in the same period of 2020.
Fast Retailing achieved an all-time high profit of 113.9 billion yen?two years ago. However, its total sales fell by 0.6 percent over that period from 623.4 billion yen to 619.7 billion yen.
Uniqlo said business is booming in markets outside of Korea.
"We are generating big profits in Japan, China, Hong Kong and Taiwan and our GU brand also did well," a Fast Retailing official said. GU is another brand that Fast Retailing operates along with Uniqlo.
Fast Retailing CFO Takeshi Okazaki said Uniqlo's collaboration with esteemed German fashion designer Jil Sander helped the company's sales grow.