By Megumi Fujikawa
TOKYO--The operator of the Uniqlo casual clothing stores said
its net profit surged 64% in the September to November quarter as
customers in Japan weren't vexed by a higher sales tax and the
yen's weakness boosted its revenue overseas.
Fast Retailing Co., Asia's biggest apparel retailer, said
Thursday its net profit increased to Yen68.83 billion ($577.1
million) from Yen42.00 billion in the same period a year earlier.
Sales rose 23% to Yen479.54 billion.
As the company based in western Yamaguchi prefecture continues
to expand globally to compete against bigger rivals such as Spain's
Inditex, Sweden's H&M Hennes & Mauritz AB and U.S.-based
Gap Inc., recent falls in the yen could give its earnings a further
boost.
Each Yen1 fall in the Japanese currency against the dollar
pushes up its profits by about Yen1 billion, Fast Retailing Chief
Financial Officer Takeshi Okazaki said at a news conference.
Following surprise easing action by the Bank of Japan in late
October, the yen fell by as much as Yen6 against in the greenback
in November.
Sales at flagship Uniqlo brand stores increased 47.3% outside of
Japan during the first quarter thanks to the strength in the
Chinese and South Korean markets. In Japan, sales rose 11.6% on the
back of robust demand for autumn and winter clothes early on and as
products in a higher price range sold well.
As a result, Uniqlo's international operations now make up 35%
of the group's business, while Uniqlo Japan's sales ratio has
fallen below 50% for the first time ever.
While a weaker yen increases the value of profits earned
overseas, it also raises operating and production costs for Fast
Retailing's domestic business.
"Rapid falls in the yen pressure initial costs," Mr. Okazaki
said. "We will do our best not to raise prices because customers
are highly price-sensitive, but we may need to do so
gradually."
Meanwhile, Fast Retailing maintained its projections for the
current business year ending in August. It expects revenue to rise
16% to Yen1.6 trillion and net profit to increase 34% to Yen100
billion.
The company is considering to revising its earnings forecasts
when movements in the foreign exchange market calm down and results
of the autumn and winter season become clearer, Mr. Okazaki
said.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
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