(Yicai) April 11 -- Fast Retailing, the Japanese firm behind the casual clothing retailer Uniqlo, has lowered its profit forecast for the fiscal second half despite first-half earnings jumping, citing President Donald Trump's "reciprocal tariffs" on US trading partners as a key factor.

The new US tariffs could impact consolidated profit by around 2 to 3 percent in the six months ending Aug. 31, or by about JPY10 billion (USD68 million), Fast Retailing announced yesterday. The estimate assumes all tax rates announced by Trump will be applied and product prices will not increase in the second half, it noted.

Trump signed an executive order on the so-called reciprocal tariffs on April 2, announcing a baseline 10 percent levy on trading partners and additional tariffs for some effective April 5. Chinese imports first faced an additional 34 percent border tax, which was then raised to 84 percent on April 8.

"The impact of tariffs is expected to be limited in the second half as a substantial amount of goods have already entered the US," said Takeshi Okazaki, senior executive officer and chief financial officer of Fast Retailing. "We will assess the situation and make any necessary adjustments from the fiscal 2026 onwards."

Fast Retailing's Upbeat Annual Profit Forecast

Despite predicting challenges in the fiscal second half, Fast Retailing raised its full-year net profit forecast by 10 percent to JPY410 billion (USD2.9 billion) and revenue by 9.5 percent to JPY3.4 trillion (USD23 billion).

Net profit jumped 19.2 percent to JPY233.5 billion in the six months ended Feb. 28 from a year earlier, while revenue rose 12 percent to JPY1.79 trillion, the Yamaguchi-based company noted.

Uniqlo International, which excludes the Japanese apparel retailer’s home market, had its operating profit climbed 11.7 percent to JPY168.5 billion, while its revenue rose 14.7 percent to JPY1.01 trillion, Fast Retailing added. However, its earnings from China dropped due to weakened consumer demand for apparel and challenges in product mix alignment with regional temperature variations, it said.

The North American market presents a mixed picture, Fast Retailing noted, adding that it expects significant revenue growth in the fiscal second half but forecasts a drop in profit mainly due to potential declines in gross profit margins due to the new US tariffs.

Fast Retailing has outlined several strategic initiatives to address the upcoming hurdles, including leveraging the Chinese mainland's "strengths as both a manufacturing and retail center to adjust systems and further reduce orders placed at the beginning of the period, and adjust production more frequently based on constant monitoring of sales throughout the period."

Fast Retailing has built a vertically integrated yet geographically dispersed business model with factories across Asia, including Thailand and China. It operated more than 1,700 outlets outside Japan as of the end of the fiscal 2024, while 72 percent of its 2,541 global shops were in Asia as of last May.

Editor: Martin Kadiev