Fast Retailing Drops on Operating Profit Decline: Tokyo MoverYuki Yamaguchi
Fast Retailing Co., Asia’s biggest clothing retailer, fell the most in a month after reporting a drop in third-quarter operating profit due to discounting and increased marketing expenses.
The Uniqlo seller’s stock dropped 5.8 percent to close at 36,450 yen. The benchmark Topix index rose 0.6 percent.
Operating profit for the three months ended May fell to 27.4 billion yen ($280 million) from 27.6 billion yen a year earlier, according to Bloomberg calculations derived from results provided by the Japanese company in a stock exchange statement yesterday. That was below the average estimate of 35 billion yen from three analysts surveyed by Bloomberg.
Fast Retailing expanded discounts because consumers are still price sensitive, Chief Financial Officer Takeshi Okazaki said at a press conference yesterday. It left its full-year profit forecast unchanged at 91.5 billion yen.
Fast Retailing, led by billionaire Tadashi Yanai, is aggressively expanding outside its home market as it targets total sales of 5 trillion yen by 2020. The Yamaguchi-based company plans to open 10 Uniqlo stores in the U.S. this fall, an increase from the current seven outlets, according to yesterday’s statement. It hopes to open about 20 shops in the U.S. annually, Okazaki said.
Operating profit at its domestic Uniqlo business dropped 5.4 percent to 19.3 billion yen, while rising 64 percent to 3.6 billion yen at the overseas operations for the three months.
Third-quarter net income rose 56 percent to 23 billion yen, aided by a weaker yen. The Japanese currency has dropped more than 13 percent against the dollar this year.
The clothing maker opened its first Uniqlo store in Indonesia in June and plans to enter Melbourne, Australia in 2014, according to its website.
The apparel maker had a total of 2,327 stores globally as of February with 847 Uniqlo stores in Japan and 359 outlets overseas, according to its website.
Yanai, Japan’s richest man, ranked 35th in Bloomberg Billionaires Index with an estimated net worth of $19.4 billion.