[Yonhap]
[Yonhap]

A record heat wave sweeping Europe is hitting the retail sector hard. Uniqlo and other major retailers are seeing sales affected by cooling system failures, store disruptions and weakening consumer spending.

Uniqlo's parent company Fast Retailing said the European heat wave that began in May has altered consumer shopping patterns and weighed on its earnings, according to the Financial Times on Thursday.

Fast Retailing Chief Financial Officer Takeshi Okazaki said at the company's quarterly earnings briefing that some European stores had temporarily suspended operations due to the extreme heat, and that sales had suffered as more consumers stayed home to avoid the scorching temperatures. Some stores also shortened their operating hours during the heat wave late last month.

"The cooling systems in European cities were not designed with this level of heat in mind, which created temporarily extremely dangerous conditions," Okazaki said. "There were stores that were unable to operate during this period."

Fast Retailing plans to review its store operations and supply chain to prepare for similar situations in the future, and to rebuild systems that allow stores to resume operations quickly after a heat wave. The company also intends to inspect cooling equipment at its European stores while continuing to develop functional clothing suited to hot weather.

The heat wave's impact was not limited to Uniqlo.

British bakery chain Greggs closed 11 stores across the United Kingdom for two days, while British retailer Marks & Spencer is drawing up contingency plans for temperatures reaching up to 45 degrees Celsius. Global fashion brand H&M is also reviewing adjustments to its clothing lineup in response to the prolonged heat.

Over the longer term, however, analysts say the heat wave could present a new opportunity for Uniqlo.

Demand in Europe is growing rapidly for the breathable, functional clothing Uniqlo originally developed for Japan's hot and humid summers.

Fast Retailing posted net profit of 146.7 billion yen ($905 million) for the quarter ending late May, up 39.1 percent from the same period a year earlier. Solid growth outside Japan, along with store expansion in Europe and the United States, drove the improvement.

If the company meets its annual sales target of 3.97 trillion yen this year, it is expected to become the world's second-largest fashion retailer, behind Inditex, the parent of Zara.

"Europe is Uniqlo's fastest-growing region and, together with the United States, is becoming a key engine of future growth," the Financial Times said.

Japan, by contrast, remained a weak spot. Domestic sales fell 14 percent from the same period last year. Cooler-than-expected weather in June slowed summer clothing sales, while price increases driven by a weak yen dampened consumer sentiment, the Financial Times said.

Industry observers say that as heat waves become more frequent due to climate change, retailers' competitiveness will increasingly depend not only on their products but also on their cooling infrastructure and supply chain resilience. Alongside growing demand for functional clothing, store operation strategies tailored to climate conditions are emerging as a new challenge for global retailers.


rainbow@heraldcorp.com