Uniqlo Owner's Profit Misses on Weak China Sales
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Fast Retailing Co. reported third-quarter earnings that missed estimates, as weaker sales in China weighed on the Japanese apparel maker's performance.
Operating profit was ¥146.7 billion ($1 billion) in the three months ended May, trailing the ¥150 billion average of analyst estimates compiled by Bloomberg. Net income came in at ¥105.5 billion during the period.
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CEO Elon Musk's turn in the political spotlight seemed to backfire after his relationship with President Donald Trump went sour. Due in part to Musk's involvement with politics, the brand has become unappealing in the eyes of some potential buyers, leading to a 16% decline in automotive revenue. Sales have plunged in Europe, and the company is losing ground to more affordable Chinese EVs. One seemingly bright spot Musk has a long history of overcoming weak results by telling investors what they want to hear on the earnings call, including making big promises about its robotaxi network and other initiatives in autonomy like its Optimus robot. He seemed to do that again on the latest earnings call, with some comments about the more affordable model he has long promised, which some have dubbed the Tesla Model 2. Musk said that the company started production of the vehicle in June and is ramping up production now. 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However, the robotaxi has gotten off to only a modest start after launching in June, and it seemed to get less attention on Tuesday's earnings call, though Musk reminded the audience: "As you can tell, autonomy is the story." Management said that robotaxis in Austin, Texas have topped 7,000 miles with no significant safety interventions. The company is aiming to launch the robotaxi in the San Francisco Bay Area next. Tesla needs growth in its core business Investors have bid up Tesla stock on hopes for its initiatives in robotaxis and more affordable vehicles, but the company needs to return to growth in selling EVs for the stock to be successful over the long term. The decline in EV sales is a reflection of a backlash against Tesla's brand. The company is also expected to struggle over the next few quarters due to the elimination of the EV tax credit and a change in other federal policies that supported EV adoption. The company also faces a $300 million effect from tariffs. 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