Fast Retailing Shares Fall After Uniqlo Sales in Japan Decline in December

Fast Retailing Co., Asia’s biggest clothing chain, fell to the lowest in more than seven weeks in Tokyo trading after sales at its Uniqlo stores in Japan dropped for the fifth straight month.

Fast Retailing lost 4.3 percent to 12,500 yen at the 11 a.m. trading break on the Tokyo Stock Exchange, poised for the lowest closing level since Nov. 15. Japan’s benchmark Nikkei 225 Stock Average gained 1.2 percent.

Sales at stores open at least 12 months fell 15.5 percent in December from a year earlier because unseasonal warm weather hurt sales of winter clothing, the Yamaguchi city, Japan-based company said yesterday. The Uniqlo chain also faces competition from domestic rivals including Aeon Co. and Shimamura Co., which are selling thermal products similar to its Heattech range.

“The sales result is further evidence that Fast Retailing is still in a slump,” Mitsuo Shimizu, an equity analyst at Cosmo Securities Co. in Tokyo, said by telephone today. “The company’s Heattech is losing its edge, and it’s hard to introduce hit products constantly.”

Fast Retailing, which generates more than 80 percent of sales in Japan, will add 44 Uniqlo stores overseas and 36 in Japan in the 12 months ending August, raising its total to 1,024, it said Oct. 8. That’s the same pace of openings as the previous fiscal year. The company said in 2009 it aims to boost the tally to 4,000 by 2020.

Return to Basics

The retailer is returning its focus to basic clothes and offering discounts after attempts to compete in trendy fashion with Inditex SA’s Zara and Hennes & Mauritz AB contributed to a 26 percent drop in market value last year.

Revenue per customer declined 6.1 percent in December. While Heattech products, fleece gear and down jackets “sold well” last month, overall sales of jackets and sweaters didn’t meet Uniqlo’s expectations, Terunobu Aono, a Fast Retailing spokesman, said yesterday, without giving projected figures.

“We can’t be optimistic about Uniqlo in Japan,” Naozumi Nishimura, an analyst at TIW Inc. in Tokyo with a “neutral plus” rating on the stock, said yesterday. Still, any share- price decline “will be limited as investors have hopes for Fast Retailing’s overseas expansion,” he said.

Shares of Aeon, Japan’s second-largest retailer, rose 0.3 percent to 1,018 yen. Shimamura was unchanged at 7,510 yen.

The average temperature in Tokyo last month was 9.9 degrees Celsius (50 degrees Fahrenheit), 1.5 degrees higher than the average in the three decades through 2000, according to the Japan Meteorological Agency’s website.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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