Tokyo—Fast Retailing Co., billed as Asia’s biggest fashion retailer, today lowered its annual profit forecast, citing increasing costs and weak demand in its home country of Japan.
For the full year ending in August, the parent of Uniqlo forecast net income of 88 billion yen (about $865 million) down from its previous estimate for 92 million despite an increase in sales to 1.37 trillion yen (up from 1.32 trillion yen). Analysts’ average estimate calls for 94.5 billion yen.
Aggressive Expansion for Uniqlo
Expenses related to part-time workers, distribution and warehousing all rose in the first while an anticipated surge in sales prior to a tax increase in Japan never happened.
“I don’t have an optimistic view about consumption in Japan,” CEO Tadashi Yanai told analysts on Wednesday.
For its second quarter ended February, Fast Retailing posted a 15% decline in net income to 23 billion yen. Net sales were up 26% to 375.3 billion yen while operating profit fell to 39.2 billion yen from 40 billion yen a year earlier.
Despite the lowered profit forecast, the company is sailing ahead with its aggressive expansion plans.
Yanai reiterated his goal to open 80 to 100 stores each year in greater China with the goal of having 1,000 stores there in 10 years.
The company plans to open 20 to 30 stores each year in the United States to hit a goal of 100 Uniqlo stores on both the East and West coasts a few years.
U.S. business is expected to become profitable by the year ending August 2016, Chef Financial Officer Ken Okazaki said.