TOKYO (Reuters) - Japanese clothing firm Fast Retailing Co 9983.T said on Thursday it would open fewer U.S. stores for its core Uniqlo brand this year after a rapid expansion failed to entice customers, leading to a lower-than-forecast annual profit.
Fast Retailing, which is seeking to overtake Zara-owner Inditex ITX.MC and H&M HMb.ST as the world's biggest fashion retailer, said it would only open five Uniqlo stores in the United States in the fiscal year that began on Sept. 1, after opening just over three times as many stores last year.
Impairment losses worth 16.1 billion yen ($135 million), related to some of its U.S. Uniqlo stores, as well as its more upmarket J Brand denim label and other brands, contributed to the company missing its own forecast for a 200 billion yen operating profit for 2014/15.
It posted a 164.5 billion yen profit instead, a 26 year-on-year percent increase.
“The (U.S. losses) were partly due to the rapid expansion with 17 new stores opening in the year,” Chief Financial Officer Takeshi Okazaki told an earnings briefing.
“The brand also still doesn’t have a lot of recognition in the United States.”
Led by Chief Executive Tadashi Yanai, Fast Retailing had set an ambitious goal of opening 100 Uniqlo stores in the United States, the world’s biggest clothing market, over the next few years.
As of the fiscal year that just ended, it had a total of 42 stores there, but the brand has struggled to compete in a crowded market place where rivals such as Gap Inc GPS.N are already well established.
For the current year, Asia’s biggest apparel retailer said it would again aim for an operating profit of 200 billion yen, lower than the average estimate among 20 analysts of 228 billion yen. It projects revenue to rise 13 percent to 1.9 trillion yen.
Reporting by Chris Gallagher and Christopher Cushing; Editing by Miral Fahmy
Our Standards: The Thomson Reuters Trust Principles.