Tokyo—Fast Retailing Co., parent of Uniqlo, plans to cut its annual forecast for the second time due to losses at its J. Brand denim line.
For the quarter ended May 31, net income fell 12% to 20.28 billion yen comparted to analysts’ average estimate for 20.2 billion.
Operating profit rose to 33.0 billion yen (about $325.09 million), just above an analysts’ average estimate of 31.23 billion yen.
‘Premium Market is Slowing’
Net Sales increased 19.4% in the third quarter to 323.6 billion yen.
But Fast Retailing said net income will probably be about 78 billion yen (about $768 million) for the year ending August, below its previous forecast of 88 billion yen and missing an 88.5 billion yen average estimate from analysts.
This is the second time Fast Retailing lowered its annual profit forecast in the current fiscal year. It cut its forecast in April to 88 billion yen from 92 billion yen set in October last year.
Fast Retailing, which has been seeking overseas growth as its domestic demand wanes, will record a special loss of 10 billion yen for J Brand and may post an impairment charge for the year as the loss-making business didn’t meet target in the third quarter.
“Affordable luxury brands by and large weren’t doing well,” Chief Financial Officer Takeshi Okazaki said at a press conference. “The premium market is slowing and the competition is rising, and we couldn’t handle it well. We regret it. We are going to turn it around.”
Fast Retailing’s Japanese casualwear GU brand and Uniqlo’s operations in Southeast Asia also performed below expectations, the company said Thursday. Uniqlo’s U.S. unit continues to make losses because of the cost of opening more stores, the company noted.
Retail sales dropped 4.3% in April after Japan raised its consumption tax that month, easing to a 0.4% decline in May, according to data from Japan’s Ministry of Economy, Trade and Industry.