The owner of fashion giant Uniqlo has posted a spike in profitability as the retail recovery in China boosted its bottom line.

Japanese conglomerate Fast Retailing registered a 23% uplift in operating profit to Y167.9bn (£1.1bn) during the first six months of its financial year, despite a 0.5% dip in revenue to Y1.2trn (£8bn). 

As a result, the group said it now expects to deliver an operating profit of Y255bn (£1.7bn) in 2020/21, compared with its previous estimate of Y245bn (£1.6bn).

Fast Retailing said a “strong rise in profit” in its native Japan and the Greater China region drove its profit gains. 

Chief financial officer Takeshi Okazaki said: “Sales and profits in China exceeded our projections. Profitability rose because we were able to limit discounts as we tried to improve our product value and branding.”

The group, which also owns fashion retailer Theory and French brands Comptoir des Cotonniers and Princesse Tam Tam, pledged to continue its store expansion push across the globe.

It expects to have 2,337 Uniqlo stores worldwide by the end of August, 813 of which will be in Japan.

Fast Retailing is, however, grappling with potential supply chain issues that could scupper its growth plans in the immediate future. 

It has suffered fires at two of the Myanmar factories that make its clothes and is also dealing with the same consumer backlash over forced labour concerns in cotton fields in Xinjiang, China, that has hit the likes of H&M and Nike. 

Fast Retailing’s billionaire founder Tadashi Yanai said: “Of course, we take a close interest in all factories or production of cotton. If we find such problems, we will immediately terminate our business transaction.

“But, beyond that, it becomes a political issue rather than a human rights issue. So, no comment.”

Fast Retailing is jostling with Zara owner Inditex for the title of the world’s most valuable clothing business. 

The Tokyo-listed group has a market cap of around £64bn and last month its value briefly overtook that of Inditex for the first time.