TOKYO — The momentum at Fast Retailing Co. Ltd. appears to be slowing, against a backdrop of challenging weather patterns and tight-fisted Japanese consumers.
The corporate parent of fast-fashion brand Uniqlo warned Friday that it’s expecting profits for the fiscal year ending August 2011 to decline 17.3 percent to 51 billion yen, or $618.27 million at current exchange. Sales are seen growing 5.1 percent to 856 billion yen, or $10.38 billion.
That forecast contrasts sharply with the double-digit growth the company has logged in past periods.
Fast Retailing revealed net profit for the most recent fiscal year ending Aug. 31, 2010, leaped 23.9 percent to 61.68 billion yen, or $684.65 million at average exchange rates for the period. Sales climbed 18.9 percent to 814.81 billion yen, or $9.04 billion.
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Uniqlo, which offers low-cost basics and the +J line from Jil Sander, has thrived in recent years as Japanese consumers traded down in trying economic times. This year, the chain registered uneven comps, which were often blamed on irregular weather patterns.
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This month the company said that an unusually warm September caused same-store sales in Japan to slide 24.7 percent. The high temperatures kept shoppers from purchasing Uniqlo’s fall-winter products like down jackets and thermal undergarments from the Heattech line. Similarly, a record-breaking heat wave in August bit into business.
Speaking at a press conference here, Fast Retailing chairman, president and chief executive Tadashi Yanai said the brand fumbled on its product mix for the spring-summer season and veered “too fashionable” for consumers. He said the company is working to correct its planning and production problems.
This summer, Fast Retailing revealed plans to discontinue five of its small women’s apparel brands including Zazie and Enraciné. It said the restructuring would generate 3 billion yen, or about $34 million, of extraordinary losses for the fiscal year ending this August. That came just weeks after Fast Retailing already slashed its full-year targets.
Although it’s still a relatively small part of Uniqlo’s business, the brand’s international operations are performing well, Yanai said.
The brand has 136 stores abroad in locations such as Paris, London, New York, China and Singapore. Yanai said the brand plans to open 42 more stores in Asia over the next months. Uniqlo will also cut the ribbon on its highly anticipated Fifth Avenue flagship, its second U.S. store, next fall, he added.