UNIQLO Makes More Profit From Every Sale. What’s Behind Its Rising Margins?

A segment-by-segment look at UNIQLO’s business-profit margin, FY2022 to FY2026: when it rose, where it rose, and what the available evidence can and cannot explain.

Balancio Intelligence · Inside UNIQLO — Research Series 001 · Article #04. This is independent financial research based on Fast Retailing’s public disclosures. It is not sponsored, reviewed or endorsed by Fast Retailing or UNIQLO.

Key findings

1. UNIQLO keeps more of every sale. For every ¥100 of sales, UNIQLO Japan and UNIQLO International combined earned ¥14.43 of business profit in FY2022 and ¥18.19 in FY2026. That is a rise of 3.76 percentage points, or 26.1% relative to the starting margin.
2. The gain came in two waves, led by different segments. In FY2024, the rise in Japan’s own margin accounted for about 1.2 of the 1.6-point combined gain. In FY2026, the rise in International’s own margin accounted for about 1.6 of 1.6 points. In FY2023 and FY2025 the combined margin moved by only about 0.3 points each year.
3. It is not a mix story. Almost all of the improvement happened inside each segment. The shift of revenue toward International added between 0.02 and 0.15 points over four years, depending on the calculation method.

Margins and decompositions are Balancio calculations from Fast Retailing’s reported segment revenue and business profit. Fiscal years end 31 August.

¥3.76 more on every ¥100

Margins are easy to quote and easy to misread, so start with the plainest version.

In FY2022, every ¥100 of combined UNIQLO Japan and International segment revenue left ¥14.43 of business profit after the cost of goods and all selling, general and administrative (SG&A) expenses. By FY2026, the same ¥100 left ¥18.19.

That difference sounds small. But margins operate on a very large revenue base. Holding FY2026 revenue of ¥3.50 trillion constant, a one-percentage-point change in the business-profit margin would correspond to about ¥35 billion of business profit.

This article asks what happened to that margin. When did it rise? In which segment? Was it a change in the mix of business, or a change in the businesses themselves? And what does Fast Retailing say drove it? The detailed analysis of cost of sales and SG&A behind those explanations is the subject of Article #05. How the margin gain fed into overall profit growth was covered in Article #01.

First, a note on points and percentages

A move from 14.43% to 18.19% can be described in two ways, and they are easy to confuse:

• +3.76 percentage points. This is the difference between the two margins: 18.19 − 14.43. It is the measure that converts directly into yen.
• +26.1% relative. This is the growth of the margin compared with where it started: 18.19 ÷ 14.43 − 1. It describes the rate of improvement.

The distinction matters in practice. The following are mathematical sensitivities at FY2026 revenue held constant, not forecasts:

• A one-percentage-point change in business-profit margin would correspond to approximately ¥35.0 billion of business profit (¥3,496.0 billion × 1%).
• A 1% relative change in the FY2026 margin of 18.19%, which is only about 0.18 points, would correspond to approximately ¥6.4 billion.

A target of “margin up 1%” and a target of “margin up 1 point” are therefore five to six times apart. In this article, “points” always means percentage points.

What the margins did

Table 1. Business-profit margin by segment (%)

	FY2022	FY2023	FY2024	FY2025	FY2026	Change FY2022–FY2026
UNIQLO Japan	13.6	13.1	16.6	17.7	18.1	+4.5 pts
UNIQLO International	15.0	15.7	16.1	16.0	18.2	+3.2 pts
Combined (revenue-weighted)	14.4	14.7	16.3	16.6	18.2	+3.8 pts

Source: Fast Retailing, Performance by Business Segment (5-year), updated 15 Oct 2026. Margins = business profit ÷ revenue, calculated by Balancio from unrounded revenue and business profit. Combined = total business profit of both segments ÷ total revenue. Changes are calculated from unrounded margins and may differ by 0.1 from the difference of the rounded figures shown.

Figure 1. Business profit per ¥100 of sales (business-profit margin): UNIQLO Japan, UNIQLO International and the combined revenue-weighted margin, FY2022–FY2026. Source: Fast Retailing, Performance by Business Segment (5-year), updated 15 Oct 2026 (reported revenue and business profit); margins calculated by Balancio.

What the chart shows. The two segments did not improve together. Japan’s margin dipped in FY2023, jumped 3.4 points in FY2024, and then rose more slowly. International’s margin rose gradually to 16.1% in FY2024 and edged down to 16.0% in FY2025, a decline of about 0.14 points. It then jumped 2.2 points in FY2026 (2.26 before rounding). By FY2026 the two had converged at around ¥18 of business profit per ¥100 of sales.

What it means. The combined margin rose in steps rather than smoothly. Most of the four-year gain happened in two years, FY2024 and FY2026, and each step came mainly from one segment. A reader looking only at the combined line would miss that the two segments took turns.

Inside the segments, or just a different mix?

The combined margin is a revenue-weighted average of two segment margins. It can rise in two ways: the segments become more profitable, or the business shifts toward the more profitable segment. Over these years, revenue shifted strongly toward International, whose share of combined revenue rose from 58% to 69%. It is therefore worth testing whether that shift, rather than better margins inside each segment, explains the result.

For more on how Japan and International differ in scale and profit contribution, see Article #02: Is Japan Still UNIQLO’s Most Important Market?.

We split each year’s change in the combined margin into three parts:

• Japan within-segment effect: the change in Japan’s own margin, weighted by Japan’s current-year share of revenue;
• International within-segment effect: the same for International;
• Mix effect: the change in each segment’s revenue share, valued at its prior-year margin.

The three parts add up exactly to the change in the combined margin.

Table 2. Annual change in the combined margin, by source (percentage points)

Year	Japan within	International within	Mix	Combined change
FY2023	−0.19	+0.40	+0.05	+0.26
FY2024	+1.21	+0.30	+0.08	+1.59
FY2025	+0.39	−0.09	−0.00	+0.30
FY2026	+0.12	+1.56	−0.07	+1.62

Calculated by Balancio from Fast Retailing’s unrounded segment revenue and business profit. Components are computed at full precision and then rounded, so a row may not add exactly. For example, FY2026 components sum to +1.61 after rounding, against a full-precision total of +1.617 (+1.62).

Figure 2. Annual change in UNIQLO’s combined business-profit margin, split into the Japan within-segment effect, the International within-segment effect and the revenue-mix effect, FY2023–FY2026 (percentage points). Source: Fast Retailing, Performance by Business Segment (5-year), updated 15 Oct 2026 (reported); decomposition calculated by Balancio (current-year revenue weights for within-segment effects; prior-year segment margins for the mix effect).

What the chart shows. FY2024 and FY2026 were the two years with the largest increases in the combined margin, and each was driven mainly by a single segment:

• Wave 1, FY2024 (Japan-led): Japan’s within-segment effect was +1.21 of the +1.59-point combined gain.
• Wave 2, FY2026 (International-led): International’s within-segment effect was +1.56 of the +1.62-point gain.
• FY2023 and FY2025: the segments partly offset each other. In FY2023, Japan’s margin fell while International’s rose. In FY2025, the reverse happened. The combined margin moved only about 0.3 points in each of these years.

In every year, the mix bars are small, under 0.1 points.

Over four years. Measured directly from FY2022 to FY2026, within-segment improvement explains 3.61 of the 3.76-point gain under this method, and mix explains 0.15 points. Under an alternative but equally valid convention (prior-year weights for the within-segment effects and current-year margins for mix), within-segment improvement explains 3.75 points and mix only 0.02. Both methods lead to the same conclusion: the shift of revenue toward International was not the main source of the margin gain. The two methods divide the within-segment gain between Japan and International differently, so we do not rank the segments on a four-year basis.

Why mix matters so little here. A mix shift only moves the combined margin if the segments earn different margins. Japan and International stayed within 1.7 points of each other in every year except FY2023, when the gap was 2.6 points, and by FY2026 they were almost identical. Revenue could move toward International without changing the average much.

What Fast Retailing says drove each step

The financial statements show what the margins did. For why, the best available evidence is management’s own explanation in each year’s results. These explanations are reported here as management’s view, not as tested findings.

Table 3. Reported changes in gross margin and SG&A ratio (percentage points)

Year	Japan gross margin	Japan SG&A ratio	International gross margin	International SG&A ratio
FY2023	−1.0	improved 0.6	not stated	not stated
FY2024	+2.9	improved 0.5	not stated	not stated
FY2025	−0.1 (50.7%)	improved 1.2 (33.0%)	−0.1 (55.9%)	unchanged (39.9%)
FY2026	−0.1 (50.6%)	improved 0.4 (32.6%)	+1.7 (57.6%)	improved 0.6 (39.3%)

Sources: Fast Retailing results summaries for FY2023, FY2024, FY2025 and FY2026; results presentations for FY2025 and FY2026 (UNIQLO Japan and UNIQLO International sections). “Improved” means the ratio fell. Figures are as reported, rounded to 0.1 point. Gross margin, SG&A ratio and business-profit margin are different measures; the business-profit margin is approximately gross margin minus SG&A ratio.

UNIQLO Japan. Fast Retailing management attributed the FY2023 fall in Japan’s gross margin to a weaker spot yen on additional production orders. It attributed the FY2024 gross-margin gain of 2.9 points to “stronger control over production orders”. The company stated that this limited exposure to spot exchange rates and reduced second-half discounting. After FY2024, Japan’s gross margin edged down by 0.1 point in each of FY2025 and FY2026. For FY2026, the company cited forward exchange contracts at a weaker yen. Japan’s later gains came through the SG&A ratio instead. Management attributed that to strong sales improving cost ratios such as store rent and personnel.

UNIQLO International. Segment-level gross margin and SG&A ratio changes were found only for the last two years.

• FY2025. International’s business-profit margin edged down from approximately 16.1% to 16.0%. The reported gross margin fell 0.1 point and the SG&A ratio was unchanged. The company stated that additional US tariff costs were absorbed through product price revisions, reduced discounting and stronger cost controls.
• FY2026. According to its FY2026 results presentation, International’s gross margin rose 1.7 points and its SG&A ratio improved 0.6 points. Management cited reduced discounting in North America and Europe. It also cited the resolution in Europe, from the third quarter, of overlapping warehouse costs incurred in FY2025.
• Royalties (both years). Higher royalty payments under advance pricing arrangements added 0.2 points to International’s SG&A ratio in each year. The company stated that these do not affect consolidated results.

What the pattern suggests (Balancio interpretation). The two waves look different in kind. Japan’s main step came through the gross margin, and later gains came through the SG&A ratio. International’s step came through both at once. Neither pattern proves greater operational efficiency. A falling SG&A ratio on rising sales can reflect fixed costs spread over more revenue as much as structural savings, and a higher gross margin can reflect pricing, discounting, product mix or currency. Separating these is the task of Article #05.

What currency does to margins

Currency affects margins differently from revenue. When overseas results are translated into yen, revenue and profit both scale up, so the margin is largely unchanged by translation alone. Currency also affects costs directly. UNIQLO Japan sells in yen but buys merchandise using foreign-currency forward contracts, so a weaker yen raises its cost of sales ratio. The company cited this in FY2023 and FY2026. For FY2027, the company expects Japan’s gross margin to contract slightly for the same reason, its SG&A ratio to stay flat and its business profit to remain steady.

We have not attempted to quantify currency effects on margins, because Fast Retailing does not disclose them at segment level. The broader currency question is the subject of Article #07.

Why this matters for finance leaders

The findings above are specific to UNIQLO. The practices below apply to any multi-segment business. They assume no access to UNIQLO’s internal data and make no claim about how UNIQLO’s management makes decisions.

State the unit every time. Margin targets and variance reports often mix percentage points and relative percentages. At UNIQLO’s FY2026 scale, holding revenue constant, the gap between a one-point and a 1% relative change is roughly ¥35 billion against ¥6 billion. Board materials should say which unit is meant.

Separate within-segment change from portfolio mix. A rising group margin can mean the businesses improved or that the portfolio shifted toward higher-margin units. Both can be valuable, but they call for different decisions. A routine within-versus-mix split, with the convention disclosed, shows which one happened. UNIQLO’s case also shows that the split between segments can depend on the method, so conclusions should rest on what both methods agree on.

Read margin changes through both lines. The same margin gain can come through the gross margin or through the SG&A ratio, and the two have different durability. Gains from spreading costs over strong sales can reverse if sales slow. Gains from pricing, sourcing or discount discipline may last longer, but can face external pressure from currency or tariffs.

Do not infer efficiency from a margin alone. A higher margin is consistent with efficiency, but also with pricing power, lower discounting, product mix, currency or a favourable year. Treat it as a question to investigate, not a conclusion.

Map currency exposure through purchasing, not just translation. For groups that sell in one currency and buy in another, the margin risk sits in the cost of goods, not in the translated results.

Three questions for your next margin review:

1. How much of this year’s margin change came from within each segment, and how much from mix, under a stated convention?
2. Did the change come through the gross margin or the cost ratio, and how much of it would remain if sales growth slowed?
3. Which part of the margin is exposed to currency through purchasing rather than translation?

All articles in this series lead to the full report, Inside UNIQLO — Balancio Intelligence Research Series 001.

What the numbers cannot tell us

• Causes. The figures show how margins moved. The reasons given are management’s explanations and are not independently tested. Article #05 examines cost of sales and SG&A in more detail.
• International before FY2025. Segment-level gross margin and SG&A ratio changes for International were not found for FY2023–FY2024 in the results summaries reviewed.
• Currency. Transaction effects on margins are not disclosed by segment.
• Capital. Balance-sheet and cash-flow data are published only for the group, so margins cannot be linked to capital employed by segment.
• FY2022 comparability. See the methodology note below.

Research methodology and sources

Scope. UNIQLO Japan and UNIQLO International, FY2022 (September 2021 – August 2022) to FY2026 (September 2025 – August 2026), IFRS, ¥ million. Business profit = revenue − cost of sales − SG&A (Fast Retailing definition). Reported figures are Fast Retailing’s. Margins, changes and decompositions are Balancio calculations from unrounded inputs. Management explanations are labelled and attributed.

FY2022 comparability. All five years come from the historical series in Fast Retailing’s five-year segment table. From the first quarter of FY2023, Fast Retailing moved its Royalties Division out of the UNIQLO Japan segment. The FY2022 segment business-profit figures used here match the FY2022 comparatives Fast Retailing published in its FY2023 results summary, which indicates they are presented on the post-reclassification basis. Fast Retailing does not, however, publish a detailed reconciliation of the restatement. Full comparability between FY2022 and later years is therefore taken from the company’s own presentation rather than independently confirmed. The same approach is used in Article #01.

Formulas.

• Segment margin = segment business profit ÷ segment revenue.
• Combined margin = (Japan BP + International BP) ÷ (Japan revenue + International revenue). Example FY2026: 635,975 ÷ 3,495,978 = 18.19%.
• Change in points = margin(t) − margin(t−1). Relative change = margin(t) ÷ margin(t−1) − 1.
• Decomposition (convention used): Δ combined margin = Σ [revenue weight(t) × Δ segment margin] + Σ [Δ revenue weight × segment margin(t−1)], where revenue weight = segment revenue ÷ combined revenue. Worked example, Japan within-segment effect in FY2024: 932,227 ÷ 2,644,060 = 35.26% weight; margin change 16.562% − 13.117% = 3.446 points; product = +1.214923 points, rounded directly to +1.21.
• Alternative convention: Σ [revenue weight(t−1) × Δ segment margin] + Σ [Δ revenue weight × segment margin(t)]. Over FY2022–FY2026 it gives a mix effect of 0.02 points instead of 0.15.
• Sensitivity of one point = revenue × 1%. FY2026: ¥3,496.0 billion × 1% = ¥35.0 billion, at revenue held constant.

Sources.

• Fast Retailing, Performance by Business Segment (5-year), updated 15 Oct 2026, accessed 9 Nov 2026.
• Fast Retailing, Results Summary for FY2023 (PDF), published 12 Oct 2023, pp. 2–3; FY2024 (PDF), Oct 2024, pp. 2–3; FY2025 (PDF), published 9 Oct 2025, pp. 2–4; FY2026 (PDF), published 8 Oct 2026, pp. 1–5.
• Fast Retailing, results presentations for FY2025 (PDF) and FY2026 (PDF), UNIQLO Japan and UNIQLO International sections.
• Fast Retailing, Results for FY2023 and Estimates for FY2024 (presentation PDF), 12 Oct 2023 (Royalties Division reclassification).

Independence. This is independent research by Balancio Indo using public information only. It has not been sponsored, reviewed or approved by Fast Retailing Co., Ltd. or UNIQLO. Nothing in it is investment advice.