Fast Retailing shares hit record high

Tokyo

FAST Retailing Co shares rose to a record after Asia's largest apparel maker increased its annual profit forecast 20 per cent on strong domestic and international sales of Uniqlo casual wear.

The stock climbed to as high as 50,650 yen in Tokyo trading on Friday, the highest intraday level since its listing on the exchange in 1997. It closed at 49,700 yen, up 2.5 per cent. The benchmark Topix was down 0.29 per cent.

The Yamaguchi, Japan-based company on Thursday reported net income will be 120 billion yen (S$1.36 billion) for the year ending in August, up from its previous forecast of 100 billion yen. That compares with the 125.6 billion yen average of 18 analyst estimates compiled by Bloomberg.

Billionaire chairman Tadashi Yanai wants to make Asia's biggest clothing retailer the world leader, aiming to hit five trillion yen in sales by 2020.

Fast Retailing's priorities are to ensure stable growth for Uniqlo in Japan while speeding up expansion of its international stores and restructuring the global brands unit, Mr Yanai said in October.

"The new forecasts look conservative given the strong domestic business, and there is a high chance that Fast Retailing will achieve its targets," said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo.

The retailer also upgraded its sales projection to 1.65 trillion yen from 1.6 trillion yen.

Uniqlo Japan boosted sales of winter items such as ultra-light down jackets and has seen strong interest in spring merchandise as well, Nomura Holdings Inc analyst Masafumi Shoda wrote in a report before the results. Strong sales were driven by the company's efforts to diversify its product range and appeal to more customers, he wrote.

Domestic sales of the Uniqlo brand rose 12.1 per cent year on year. International sales jumped 48.9 per cent, with Asian markets such as mainland China, Taiwan and South Korea improving.

Uniqlo stores in Australia and the US lost money, according to the company's financial filing.

Uniqlo's same-store sales in Japan rose 7.2 per cent in the first seven months of the current fiscal year, according to a company sales update released earlier this month. That's twice as fast as an earlier forecast of about 3.5 per cent growth for the year.

Revenue per customer rose 10.1 per cent in the seven-month period, the data showed.

Operating profit for the three months ending on Feb 28 was 58.7 billion yen, according to Bloomberg calculations, beating the 43.1 billion yen average estimate of four analysts.

Uniqlo each year intends to open 100 stores in the greater China region, 30 in the United States and 10 in Europe, according to a presentation Mr Yanai delivered in October.

Recent declines in the yen have prompted Fast Retailing to revise its exchange-rate projections.

The company now bases its full-year forecasts on the assumption that the yen will average 118 per US dollar, compared with 102.50 it had in January. The Japanese currency was trading at about 120.3 yen to the dollar on Friday.

Fast Retailing will raise prices of domestic Uniqlo products by an average of 10 per cent for its autumn and winter wear this year due to the weak yen, chief financial officer Takeshi Okazaki said at a briefing in Tokyo after the results.

A weaker yen pushes up import material costs while boosting the value of repatriated earnings from overseas.

Each one-yen drop against the dollar increases the group's net income by about one billion yen, Mr Okazaki said in January. Bloomberg