* Fast Retailing Q1 (Sep-Nov) operating profit up 13 pct at
64 bln yen
* Full-year op profit target left unchanged at 156 bln yen
* China, S.Korea show stronger than expected sales rise
* Domestic strategy on 'affordable luxury' boosts sales
(Adds chief financial officer's comments, context)
By Ritsuko Shimizu
TOKYO, Jan 9 Asia's biggest clothing retailer
Fast Retailing Co Ltd posted a higher-than-expected
first-quarter profit, helped by strong Japan sales at its
flagship casual Uniqlo brand which lured thrifty customers with
affordable luxury items.
The retailer also benefited from a move to boost sales
growth outside Japan, especially in China and South Korea, with
a weaker yen helping to plump up foreign revenues.
"Along with putting out cashmere and other high-priced
goods, we want to boost spending by increasing the number of
items people buy," Chief Financial Officer Takeshi Okazaki told
an earnings briefing.
He cautioned, however, that the higher spending did not mean
Japanese customers had shed their cost-conscious ways.
Fast Retailing managed to boost spending per customer by
coaxing shoppers to splurge on items such as cashmere sweaters
and ultralight down coats and vests which were priced well below
designer items but higher than Uniqlo's usual fashion ranges.
The strategy marks a shift from the company's earlier
attempts to boost sales by offering discounted items. It also
coincides with aggressive policies by Prime Minister Shinzo
Abe's government to break Japan's decade and a half of deflation
by encouraging consumer spending.
Seven and I Holdings Co Ltd, operator of Japan's
largest convenience store chain, 7-Eleven, has also boosted
customer spending by offering premium home-brand goods and
freshly brewed coffee, helping to power its nine-month profit to
SELLING MORE ABROAD
Fast Retailing's operating profit in its first fiscal
quarter to end-November rose 13 percent to 64.0 billion yen
($610.48 million), surpassing the 59.9 billion yen forecast of
four analysts surveyed by Thomson Reuters I/B/E/S.
The company left its operating profit target for the full
year to end-August unchanged at 156 billion yen, a gain of 17.4
percent. That is in line with analysts' average estimate of
155.36 billion yen.
Overseas sales at Uniqlo jumped 77 percent to 114 billion
yen ($1.09 billion), more than half the domestic total of 208
billion yen. Domestic Uniqlo outlets' share of total operating
profit slipped to two-thirds from nearly 80 percent.
Okazaki said the company had exceeded its targets in China
and South Korea, key countries in its Asia-focused expansion
plan where some analysts had feared business would be hurt by
Japan's diplomatic tensions with its neighbours.
"We don't get the sense that there's any impact. Our brand
continues to draw support in China and Korea," he said. A visit
by Abe to Yasukuni Shrine, seen in many parts of Asia as a
symbol of Japan's past militarism, helped fan tensions.
Government data late last month pointed to a rise in Japan's
so-called core-core price index, which is similar to the U.S.
core inflation index, but wages remain a weak link.
Fast Retailing, the most heavily weighted stock in Tokyo's
benchmark Nikkei average, fell 3.8 percent on Thursday
to close at 39,800 yen before the figures were announced.
The stock has risen 82 percent since the start of last year
compared with the Nikkei's 53 percent gain.
($1 = 104.8350 Japanese yen)
(Additional reporting by Dominic Lau; Editing by Edmund Klamann
and Miral Fahmy)