UPDATE 3-Fast Retailing shares surge on sales jump, upgrade
* Shares up nearly 15 pct to nine-month high
* Morgan Stanley and UBS raise rating (Updates with closing share price, adds analyst comment)
TOKYO, Oct 5 (Reuters) - Shares of Fast Retailing (9983.T) surged nearly 15 percent to a nine-month high on Monday after its Uniqlo casual-clothing chain in Japan posted its biggest jump in same-store sales for 10 months, as demand for autumn goods was boosted by the early onset of colder weather.
The company and other "fast fashion" retailers like Sweden's Hennes & Mauritz (HMb.ST) and Spanish Inditex's (ITX.MC) Zara have so far weathered the downturn better than mid-market rivals, but Uniqlo's performance stood out even among its peers.
"The increase in (Uniqlo's) September same-store sales was beyond our imagination," Masafumi Shoda, a retail analyst at Nomura Securities, wrote in a note.
"We are starting to see a sales trend that is even better than last year's strong sales, as new merchandise is creating demand," he said. He kept a "buy" rating on the firm.
The stock's one-day gain added about 186 billion yen ($2.1 billion) to the company's market capital, which stood at 1.44 trillion yen at Monday's close.
The clothing retailer recorded a 31.6 percent jump in same-store sales at its 700 shops from a year earlier in September.
Colder weather in the month helped drive up sales of items such as synthetic leather jackets and flannel shirts, the company said. A five-day weeked also increased customer traffic, it said.
Following the strong monthly sales, Morgan Stanley raised its rating to "overweight" from "equal-weight", and UBS lifted the firm to "buy" from "neutral".
"With economic sentiment still depressed, we expect the reasonable prices and high quality of Fast Retailing's merchandise to find continuing favour with consumers," Yukimi Oda, a retail analyst at Morgan Stanley Japan, wrote in a note.
The company, which is scheduled to announce its full-year results on Thursday, has forecast a 23 percent increase in operating profit for the year that ended in August.
During the same period, Uniqlo's same-store sales in Japan rose 11.3 percent.
SPECIALTY RETAILERS SHINE
Uniqlo's robust performance is all the more surprising as it comes a prolonged soft patch in consumer spending in Japan, with many department stores and supermarkets suffering sharp sales declines for months.
Last week, Seven & I Holdings, Japan's largest retailer, (3382.T) reported a 20 percent fall in operating profit at 118.14 billion yen ($1.3 billion) for March to August. [ID:nT176719]
The company and rival Aeon Co Ltd (8267.T) have been struggling to reverse weak sales at supermarket that offer clothes and household items as well as groceries.
"Uniqlo, Shimamura and Nitori. The faces of the winners have not changed since last year," said Shigeo Sugawara, senior investment manager at Sompo Japan Asset Management, referring to clothing retailer Shimamura (8227.T) and furniture chain Nitori (9843.T).
Both Shimamura and Nitori posted strong profit growth for the six months ended in August after they successfully attracted thrifty consumers with low-priced items.
"These winners can keep opening new stores with their strong cash flows, and this won't change in the short term," Sugawara said.
After the market close on Monday, shoe store chain ABC Mart (2670.T) reported a 6.3 percent rise in its September same-store sales.
Fast Retailing shares ended up 14.9 percent at 13,530 yen, compared with a 0.6 percent drop in the Nikkei average .N225.
Shimamura rose 1.5 percent to 9,070 yen and Nitori gained 0.7 percent to 7,700 yen. (Additional reporting by Aiko Hayashi; Editing by Joseph Radford and Hugh Lawson)
