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Foreign visitors have made up 10 per cent of clothing retailer Uniqlo’s sales in Japan for the first time, highlighting the tailwinds from a tourism boom and historically weak yen.
The number of travellers purchasing Uniqlo’s sweatshirts, baggy curve jeans and Heattech thermal layers expanded in the three months to the end of November from 8 per cent of Japan sales just over a year ago.
Fast Retailing, Asia’s largest clothing retailer, which owns Uniqlo, raised its annual net profit forecast to ¥450bn ($2.9bn) on Thursday after reporting revenue jumped almost 15 per cent to more than ¥1tn.
The sales growth came despite tensions with China, a major source of tourism, after Prime Minister Sanae Takaichi made remarks to parliament in November about Japan’s role in a hypothetical war over Taiwan.
Takeshi Okazaki, chief financial officer of Fast Retailing, acknowledged the possibility of future revenue declines from souring ties but said sales in Japan and China had not fallen and even accelerated at the start of this year because of cold weather.
“If you look at inbound tourism as a whole, then it’s now 10 per cent of Uniqlo Japan,” he said. “As a whole, this has not fallen particularly and, in fact, grew during December.”
Its results underline the boost to Japanese retailers from the Asian nation’s surging popularity as a tourism destination, after the yen weakened to ¥156 a dollar, giving US tourists 50 per cent more spending power than five years ago.
Pan Pacific International, which owns Don Quijote, a retail chain popular with tourists for offering everything from matcha KitKats and Asian beauty products to manga figurines, has also benefited.
Its October tax-free sales soared 40 per cent year on year to exceed ¥20bn in a single month for the first time. Tourists benefit from a 10 per cent exemption on consumption tax.
While official statistics are yet to be finalised, the number of people visiting Japan is on track to exceed 40mn in 2025, doubling in less than a decade, according to the Japan National Tourism Organization.
The influx of tourist spending has sparked a backlash from Japanese residents, who have been grappling with the rising cost of living, slow wage increases and a weak yen.
Last year, the ruling Liberal Democratic Party floated proposals to abolish the consumption tax exemption or introduce a departure tax levied on visitors leaving the country.
Japan’s tourism boom has coincided with Uniqlo’s global expansion plans. Fast Retailing has been opening stores in the heartlands and smaller cities of the US and Europe, with the aim of overtaking Zara owner Inditex as the world’s largest clothing retailer.
