Apr 9, 2015
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Fast Retailing ups guidance as overseas Uniqlo shines

Apr 9, 2015

Fast Retailing Co Ltd raised its full-year earnings forecasts on Thursday after sales at its Uniqlo casual-wear stores in Greater China and South Korea grew more strongly than expected, showing that its overseas expansion is bearing fruit.

Overseas growth is key to the Japanese firm's goal of becoming the world's top apparel retailer by 2020 ahead of Zara-owner Inditex SA, Hennes & Mauritz AB (H&M) and Gap Inc.

Uniqlo's Fifth Avenue global flagship in New York City - Uniqlo USA

Chief Executive Tadashi Yanai said Fast Retailing would have more Uniqlo outlets overseas than in Japan by this autumn, with openings in Greater China - mainland China, Hong Kong and Taiwan - to continue at break-neck pace.

"Maybe in about five years we'll have 1,000 stores" in Greater China, he told a news conference, compared with 415 as of end-February. "Eventually we want to have about 3,000 stores (there)," he said, without specifying a time frame.

Uniqlo, known for its HeatTech fabric technology and rainbow coloured-basics, now has close to 1,600 stores globally, with about 46 percent of those outside Japan.

Fast Retailing said it now expects operating profit of 200 billion yen ($1.7 billion) for the fiscal year through August, up 11 percent from its prior estimate of 180 billion yen. The average forecast of 22 analysts was for 197.25 billion yen.

Asia's biggest apparel retailer also bumped up its revenue forecast to 1.65 trillion yen from 1.60 trillion yen, and its net profit estimate to 120 billion yen from 100 billion yen.

Overseas Uniqlo sales jumped 49 percent from a year earlier, led by Greater China and No.2 foreign market South Korea, although the United States remained a weak spot. It did not break out sales results by country, only saying whether they met their targets.

In Japan, Uniqlo sales rose 12 percent during the half as shoppers snapped up items like its ultra-light down jackets and extra-fine merion sweaters.

Fast Retailing also got a boost from the yen's depreciation, booking a 13.5 billion yen foreign-exchange gain for the half.

But the company also warned it was facing rising import costs from the weaker yen. As a result, it will raise prices by about 10 percent on average for roughly a fifth of its products in the next autumn/winter season at Uniqlo Japan.

Fast Retailing shares are up 10 percent in the year to date, while the Topix index is up 13 percent. The stock closed up 2.0 percent ahead of the earnings release, versus a 0.4 percent gain in the benchmark.

1CNY = $0.16/£0.11

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