Fast Retailing Co., operator of Japan's biggest casual clothing chain Uniqlo, raised its full- year profit forecast for the third time, as recession-hit consumers buy more of its T-shirts, skirts and bra tops.
Net income is forecast at 52 billion yen (US$558 million) for the year ending Aug. 31, up 4 percent from an April estimate of 50 billion yen. It posted profit of 43.5 billion yen last year.
Chief Executive Officer Tadashi Yanai, who owns a 27 percent stake, is benefiting as Japan's five-year-high jobless rate and 12 straight months of wage declines drive consumers to discount retailers. The company tripled shipments of bra tops, which are camisoles and tank tops with fitted bra cups, to about 9 million this year.
“Fast Retailing is shining in this economic environment,” Koichi Ogawa, chief portfolio manager at Tokyo-based Daiwa SB Investments Ltd., said before the announcement. “Consumers like Uniqlo for its quality and price.”
Full-year sales may rise 16 percent to 682 billion yen, and operating profit may rise 23 percent to 108 billion yen, Fast Retailing said. The company also raised its full-year dividend plan by 10 yen to 160 yen a share.
Sales at Uniqlo stores open at least a year in Japan gained for the eighth straight month, rising 6.4 percent in June. The Yamaguchi, western Japan-based company had 777 stores, including 20 franchise shops, in the country as of May 31. Same-store sales strip out the effect of outlets that have recently opened or closed.
Uniqlo
The company today raised its forecast for same-store sales in the six months ending Aug. 31 to a gain of 9.3 percent from its previous estimate of a 2.3 percent increase.
Uniqlo also benefited from sales of T-shirts featuring Tweety Bird and other cartoon characters, priced at 1,500 yen or more. Prices for bra tops start at 1,500 yen.
In the three months to May, profit rose 24 percent to 14.1 billion yen, as sales surged 27 percent to 179.6 billion yen.
Fast Retailing shares fell 0.2 percent to 11,690 yen at the 3 p.m. close on the Tokyo Stock Exchange, before the company announced the results. The stock has fallen 9.9 percent this year, compared with the benchmark Nikkei 225 Stock Average's 4.9 percent gain.
Asia Push
Yanai, Japan's richest man, is expanding the Uniqlo brand outside Japan as the country's aging population dims prospects. It aims to spend as much as 400 billion yen on acquisitions to double annual sales to 1 trillion yen by 2010.
The company may expand its network of stores in China and Hong Kong to about 100 stores, up from an expected 43 for this business year, and establish a similar number of outlets in South Korea. It opened its first store in Singapore in April.
The company may open 100 stores in other Asian countries including India, Thailand and Indonesia, Toshihisa Tokunaga, director of corporate management and control, said at a news conference in Tokyo.
In 2007, it was outbid by Dubai investment firm Istithmar PJSC for Jones Apparel Group Inc.'s Barneys New York chain. Fast Retailing, which opened its first overseas store in London in 2001, has shops in countries including the U.S., China and France.
