Yamaguchi, Japan—Fast Retailing Co., which plans to open 20 Uniqlo stores a year in the United States, reported last week that its third quarter operating profit dropped, hit by discounting and increased marketing expenses.
For the quarter ended May 31, Fast Retailing posted an operating profit of 27.4 billion yen (about $280 million) compared to 27.6 billion yen a year ago. Analysts’ average estimate had expected 35 billion yen.
The company blamed increased discounts due to price-sensitive customers, according to Takeski Okazaki, chief financial officer.
Operating profit at its domestic Uniqlo stores dropped 5.4% to 19.3 billion yen. However, at its Uniqlo international division, operating profit rose 64% to 3.6 billion yen.
Despite the stagnant operating profit, the Asian retail giant posted a 56% increase in its net profit for the third quarter. But with the gains due mostly to short-term factors, the company’s shares fell in trading on the Japanese stock exchange.
Fast Retailing plans to hit 5 trillion yen in sales by 2020 which includes an increased presence in the United States.
Okazaki said the company plans to increase its U.S. stores from the current seven to an additional 10 Uniqlo stores this fall. Thereafter, the company plans to add 20 new stores a year in the United States. The company operates 2,327 stores globally with 847 Uniqlo doors in Japan with an additional 359 stores internationally.
Fast Retailing reiterated its full year profit forecast of 91.5 billion yen.