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Uniqlo-owner Fast Retailing sees no impact from China turmoil
[TOKYO] Fast Retailing Co Ltd brushed off concerns about China's economy triggered by recent stock market turmoil, saying it was pushing ahead with plans to open more stores in the biggest foreign market for its Uniqlo casual clothing chain.
The Japanese company is expanding rapidly in China as it aims to become the world's biggest apparel retailer ahead of Zara-owner Inditex SA, Hennes & Mauritz AB (H&M) and Gap Inc by 2020.
A near one-third plunge in Chinese stocks in the past month has intensified concerns about the economy, where growth is already slowing, but Chief Financial Officer Takeshi Okazaki said Fast Retailing's China strategy was so far unchanged. "We're seeing no impact at all on our business from the current situation," Okazaki told reporters after the retailer posted an almost 20 per cent year-on-year rise in third-quarter operating profit to 39.20 billion yen (US$323 million).
Fast Retailing Chief Executive Tadashi Yanai has said Uniqlo aimed to have 1,000 stores in Greater China in about five years - more than its Japan total - and eventually as many as 3,000. It had 442 in China, Hong Kong and Taiwan as of end-May.
Sales exceeded the company's expectations in both China and South Korea, the company's second-largest foreign market, but Japan remained Uniqlo's biggest overall market, where same-store sales rose 8.8 per cent in nine months through May on brisk sales of HeatTech and AIRism lines.
The company, however, forecast sales to remain under pressure in the fourth quarter after domestic sales fell 11.7 per cent in June, the steepest drop since October 2013.
Okazaki said the decline was due to bad weather that kept shoppers at home, but maintained Uniqlo Japan's fiscal-year same-store sales growth target of 5.5 per cent.
Fast Retailing also kept its overall guidance unchanged after raising its estimates three months ago. The company expects operating profit of 200 billion yen in its fiscal year through August, on revenue of 1.65 trillion yen.
Shares of Fast Retailing have risen about three-quarters since the start of its fiscal year. The stock closed up 4.1 per cent before the results announcement.