Fast Retailing Co. fell by the most in more than a year after the apparel retailer raised doubt about meeting sales targets for Uniqlo sales in Japan, saying unseasonably cool weather has damped demand for summer clothes.
The shares closed down 6 percent at 54,010 yen by the end of Tokyo trading Friday, the biggest slide since April 2014. The shares had gained 23 percent so far this year, outperforming the 13 percent gain in the benchmark Topix index.
Lower than expected temperatures between June and August in Japan and wider losses at Uniqlo’s U.S. stores will probably weigh on performance in the final fiscal quarter, Chief Financial Officer Takeshi Okazaki said in a briefing Thursday. He didn’t give further details or revised sales targets.
The sluggish sales “owe strictly to weather and are not indicative of a problem with merchandising,” Kuni Kanamori, an analyst at SMBC Nikko Securities, wrote in a note dated July 9.
Fast Retailing on Thursday maintained its forecast for annual profit at 120 billion yen ($984 million), 9.8 percent below the 133 billion yen average of analyst estimates compiled by Bloomberg.
Export to China
Same-store sales in Japan dipped 12 percent in June as the cooler weather curbed demand for summer clothes, the company said earlier this month.
Net income surged 36 percent in the three months ended May to 27.6 billion yen, based on nine-month figures the company released Thursday in Tokyo. Sales gained 23 percent to 398.4 billion yen in the quarter.
Investors have bet billionaire Tadashi Yanai’s clothing retailer, which offers basic designs made with advanced materials at low prices, will grow by exporting its model to faster-growing markets like China and the U.S.
The shares trade at about 41 times projected earnings, compared with about 31 times for Inditex, which sells Zara casual clothes and is Uniqlo’s bigger global rival and 24 times for Hennes & Mauritz AB, which retails the H&M brand.