TOKYO (Reuters) - Japanese clothing firm Fast Retailing Co Ltd (9983.T) suggested it may lift its full-year profit guidance as global expansion takes root, with strong overseas sales at its flagship Uniqlo brand helping to boost quarterly profit more than expected.
Growth outside its home turf is key to Fast Retailing reaching its target of becoming the world’s top apparel retailer ahead of Zara-owner Inditex SA (ITX.MC), Hennes & Mauritz AB (H&M) (HMb.ST) and Gap Inc (GPS.N) in coming years.
In September-November, the first quarter of the firm’s fiscal year, overseas sales at its Uniqlo casual-wear chain jumped 47 percent from a year earlier. That helped drive a 40 percent rise in operating profit to 91.4 billion yen ($763 million), beating the average estimate of 77.71 billion yen in a Thomson Reuters poll of four analysts.
The company left its operating profit outlook for the year through August unchanged at 180 billion yen, but suggested it may have grounds to lift that target in future after its quarterly results came in better than expected.
“After the autumn/winter season, when things are clear after looking at each business and foreign exchange rates, we will consider a revision if needed,” Chief Financial Officer Takeshi Okazaki told a news conference on Thursday.
Overseas sales at Uniqlo, known for its HeatTech fabric technology and rainbow colored-basics, were particularly strong in Asia, led by greater China and South Korea, Fast Retailing said. Still, the United States was a weak spot.
Uniqlo sales in Japan rose 12 percent, with its HeatTech line, Ultra Light Down jackets and other winter items selling well.
Spending per customer also grew after the company hiked prices 5 percent to offset the weaker yen, a factor that raises import costs.
Okazaki said Uniqlo Japan may have to raise prices again given the sharp depreciation in the yen. The Japanese currency is now down almost 20 percent versus the dollar JPY= since last summer.
Uniqlo Japan sales made up 48.5 percent of Fast Retailing’s overall sales during the quarter. That marks the first time they have accounted for under 50 percent, as sales at Uniqlo overseas and other brands, including Theory, GU and Princesse tam.tam, accelerated.
Fast Retailing shares have jumped more than a third since the start of its fiscal year in September, outperforming a roughly 8 percent rise in Japan's broad Topix .TOPX index. The stock closed up 2.3 percent before the results announcement.
Editing by Miral Fahmy and Kenneth Maxwell