Uniqlo has swung to a pre-tax loss as investment in its expansion plan and the weakening euro against the dollar hampered its bottom line.
The fashion chain suffered a pre-tax loss of €1.86m during the year to August 31, 2016, compared to a €2.5m (£2.2m) profit in the previous 12 months.
According to documents filed at Companies House, Uniqlo registered an operating loss of €1.02m, in contrast to a €3.07m (£2.7m) profit in 2015.
However, it posted an adjusted operating profit of €4.3m (£3.7m), after stripping out the impact of exchange rates and the revaluation of assets and liabilities that are not denominated in euros.
Uniqlo, which is owned by Fast Retailing, said both factors had a “significant impact” in 2016.
Foreign exchange losses along amounted to €5.4m (£4.7m).
Stores and ecommerce growth
The retailer said turnover jumped 26% to €347m (£301.3m) as new store openings and growth in its ecommerce business drove growth.
During the year, Uniqlo re-opened its Oxford Street flagship in March 2016 following an extensive revamp and debuted in Belgium after opening two stores in Antwerp.
It also opened three new stores in France – two in Paris and one in Nice – and launched three new ecommerce platforms to serve the European market.
Uniqlo warned that the European markets in which it operates are “volatile” and could spark “a downturn in sales if customers cut back on their spending.”
It cautioned that it may also be impacted by “political events”, but said it “aims to attract consumer spending by offering quality products and service levels that are above those of its competitors.”