FAST RETAILING (9983) FY2026 FY Earnings Report

Financial Highlights

• Net Sales: ¥3.96T
• Operating Income: ¥743.13B
• Net Income: ¥584.14B
• EPS: ¥1,768.08

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

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AI Financial Analysis

Executive Summary

Fast Retailing delivered a strong FY2026, with revenue of ¥39,633.89億, up 16.6%, and operating profit of ¥7,431.28億, up 31.7%. The operating margin rose to 18.8% from 16.6%, an improvement of approximately 216 basis points. Gross margin increased to 55.2% from 53.8%, or approximately 144 basis points. SG&A grew more slowly than revenue, reducing the SG&A-to-sales ratio by approximately 48 basis points to 37.1%. Profit attributable to owners rose 25.3% to ¥5,425.16億, and basic EPS reached ¥1,768.08. UNIQLO International was the core earnings engine, generating ¥4,481.24億 of segment operating profit, up 44.9%. It also represented 60.8% of group revenue, making overseas execution increasingly consequential. Operating cash flow rose 35.8% to ¥7,885.87億 and exceeded profit attributable to owners by 1.45 times. That cash result supports earnings quality, although inventory absorbed ¥757.19億 of operating cash. FY annualized inventory days were approximately 127, a material apparel-retail risk if stock ages or requires markdowns. EBITDA was ¥9,803.79億, a 24.7% margin, while operating cash flow converted at 0.80 times EBITDA. Cash and equivalents increased to ¥10,075.86億, and the current ratio was approximately 3.22 times. The ¥850 annual dividend represented about 48.1% of basic EPS, leaving earnings-based distribution capacity. Equity increased substantially, but ¥2,945.85億 of other comprehensive income—principally currency translation and cash-flow hedges—should not be mistaken for recurring profit. The supplied forward forecast implies continued revenue and operating-profit growth, but slower profit growth attributable to owners. Inventory discipline, international margins and the durability of cash generation are the principal tests of that outlook.

Profitability Analysis

The reported ROE rose to 21.2% from 20.2%. A DuPont calculation using average assets and average parent-attributable equity reconciles the current return: a 13.7% parent-attributable net margin × approximately 0.94 times FY annualized asset turnover × approximately 1.64 times average-assets-to-parent-equity leverage ≈ 21.2%. Using closing balances instead produces the supplied 18.6%; it is not directly comparable with ROE based on average equity. Parent-attributable net margin rose from approximately 12.7% to 13.7%, while closing-balance leverage declined, indicating that profitability rather than greater leverage was the clearer positive driver. Revenue grew 16.6% against SG&A growth of approximately 15.1%, demonstrating operating leverage. Gross margin improved approximately 144 basis points to 55.2%, and operating margin improved approximately 216 basis points to 18.8%. Net finance income fell to ¥593.76億 from ¥863.09億, partly offsetting operating improvement below the operating-profit line. Other income less other expenses was ¥238.48億 versus ¥114.04億; its repeatability matters when assessing normalized margins. IFRS goodwill is not routinely amortized, and goodwill of ¥80.92億 is only 0.3% of total equity.

Growth Assessment

UNIQLO International, the core business by operating-profit contribution, recorded revenue of ¥24,111.35億 (+26.2% YoY) and operating profit of ¥4,481.24億 (+44.9%); its margin was 18.6%. UNIQLO Japan generated revenue of ¥10,848.43億 (+5.7%) and operating profit of ¥1,966.52億 (+6.6%), at an 18.1% margin. GU recorded revenue of ¥3,367.17億 (+1.8%) and operating profit of ¥328.84億 (+7.8%), at a lower 9.8% margin. Global Brands revenue declined 2.3% to ¥1,285.61億, but operating profit improved to ¥44.54億 from a ¥9.50億 loss; its margin remained 3.5%. Other businesses generated ¥21.31億 of revenue (+11.6%) and ¥1.43億 of operating profit (−43.5%), at a 6.7% margin. UNIQLO International supplied roughly 78% of the consolidated year-on-year operating-profit increase, before considering changes in segment reconciliation items. The supplied forward forecast calls for revenue of ¥44,500億, operating profit of ¥8,300億 and parent-attributable profit of ¥5,600億—approximately 12.3%, 11.7% and 3.2% above FY2026, respectively. Those figures are treated as a prospective full-year outlook rather than an FY2026 progress target.

Financial Health

Current assets of ¥30,203.45億 covered current liabilities of ¥9,385.88億 approximately 3.22 times; actual net working capital was approximately ¥20,817.57億. Cash and equivalents of ¥10,075.86億 alone exceeded current liabilities, limiting near-term maturity-mismatch risk. The stated 0.56-times debt-to-equity figure corresponds approximately to total liabilities divided by total equity, rather than interest-bearing debt alone; it does not indicate aggressive borrowing. The parent-attributable equity ratio improved to 62.6% from 58.9%. IFRS lease liabilities totaled ¥5,883.58億, including ¥1,353.05億 current, and are a material store-network commitment; lease repayments were ¥1,456.50億 during the year. Retained earnings increased ¥3,645.55億, or 17.7%, to ¥24,209.92億. The much larger gain in other components of equity reflects the importance of currency translation and hedging movements to reported capital.

Notable B/S Changes

Inventories: +¥1,062.85億 (+20.8%) — growth ahead of revenue heightens sell-through and markdown risk. Other current financial assets: +¥2,374.05億 (+26.4%) — a larger financial-asset balance strengthens apparent liquidity, subject to its composition. Cash and equivalents: +¥1,143.47億 (+12.8%) — reinforces near-term liquidity. Trade and other short-term payables: +¥910.93億 (+23.4%) — supports working-capital cash flow but makes payment-term sustainability important. Other current financial liabilities: −¥902.29億 (−59.8%) — reduces near-term financial claims. Non-current lease liabilities: +¥663.83億 (+17.2%) — increases longer-duration store commitments. Retained earnings: +¥3,645.55億 (+17.7%) — strengthens the capital base through retained profit. Other components of equity: +¥2,068.61億 (+108.9%) — largely reflects translation and hedge-related comprehensive income rather than retained operating earnings.

Cash Flow Quality

Operating cash flow of ¥7,885.87億 was 1.45 times parent-attributable profit, and the reported accruals ratio was −5.4%, both supportive of cash-backed earnings. Cash conversion was less emphatic against EBITDA, at 0.80 times. Inventory growth absorbed ¥757.19億 of cash, largely offset by a ¥710.18億 cash benefit from higher trade payables; sustained reliance on supplier credit would merit attention. The supplied free-cash-flow measure of ¥4,716.98億 equals operating cash flow plus total investing cash flow and therefore incorporates deposit and investment transactions, not just store and technology expenditure. On a narrower basis, operating cash flow less ¥799.10億 of stated capital expenditure was ¥7,086.77億; deducting the separate ¥249.76億 of intangible purchases gives ¥6,837.01億. After the ¥1,456.50億 of lease repayments, that latter amount would be approximately ¥5,380.51億. Capital expenditure was only 0.34 times depreciation and amortization, triggering the underinvestment alert. The comparison needs IFRS retail context because depreciation includes leased assets, while lease repayments and right-of-use assets also reflect store-network investment. Nevertheless, stated capital expenditure fell substantially year on year, so the sustainability of physical and digital reinvestment warrants monitoring.

Dividend Sustainability

The ¥320 interim and ¥530 year-end dividends total ¥850 per share, equivalent to an approximately 48.1% dividend payout ratio against basic EPS of ¥1,768.08. Parent-shareholder dividends paid were ¥1,779.34億, covered approximately 2.65 times by the supplied ¥4,716.98億 free-cash-flow measure. That coverage remains above one time after deducting ¥1,456.50億 of lease repayments from that measure. Dividends to non-controlling interests added ¥341.76億 of cash outflow. The prospective ¥900-per-share dividend would represent approximately 49.3% of forecast EPS of ¥1,825.06. Share repurchases were negligible, so the distinction between the dividend payout ratio and the total return ratio has little practical effect this year.

Risk Assessment

Business risks include High priority — apparel inventory and markdown risk: inventories rose 20.8% against 16.6% revenue growth, while FY annualized inventory days reached approximately 127; weaker sell-through could pressure the 55.2% gross margin., High priority — international concentration: UNIQLO International contributes 60.8% of revenue and is the largest source of operating profit, increasing exposure to regional consumer demand, currencies and execution., Medium priority — lower-margin formats: GU's 9.8% margin and Global Brands' 3.5% margin trail both UNIQLO businesses, limiting group margin resilience if their sales mix rises..

Financial risks include Medium priority — fixed store commitments: ¥5,883.58億 of lease liabilities and ¥1,456.50億 of annual lease repayments raise sensitivity to weaker store productivity, although current liquidity is strong., Medium priority — investment adequacy: the flagged 0.34-times capital-expenditure-to-depreciation ratio could indicate inadequate replacement spending if persistent; IFRS right-of-use depreciation makes the simple comparison less conclusive., Medium priority — cash conversion and supplier terms: operating cash flow was 0.80 times EBITDA, and the cash benefit from rising payables nearly matched the inventory cash outflow..

Key concerns include Inventory discipline is the clearest near-term test of whether current gross margins are sustainable., ¥2,945.85億 of other comprehensive income boosted equity but did not constitute current-period net profit., Regional demand and the timing of hedge effects could cause performance to diverge from the prospective forecast..

Investment Implications

Key takeaways include Strong international growth and better gross margin drove operating profit growth well ahead of revenue growth., Operating cash flow covered earnings and shareholder dividends, while a liquid balance sheet provides a buffer., High inventory days and the low stated capital-expenditure-to-depreciation ratio temper the otherwise strong operating picture..

Metrics to watch include FY annualized inventory days, inventory growth versus sales and subsequent markdown pressure, UNIQLO International revenue growth and operating margin, Gross margin, SG&A-to-sales ratio and operating cash flow to EBITDA, Lease-adjusted cash generation and reinvestment in stores and technology.

Regarding relative positioning, The 18.8% operating margin and 21.2% reported ROE exceed the supplied strong-profitability benchmarks. Fast Retailing's 55.2% gross margin reflects specialty apparel economics rather than a general-retail comparison, while its approximately 127 FY annualized inventory days stand above the supplied retail warning thresholds.