Japanese clothing retailer Fast Retailing announced it would slash its profit outlook as sales have weakened in Japan and the US.

Even though Fast Retailing reported a healthy net profit of 14.7 billion yen (US$184.55 million) for the quarter ended May, it has lowered its profit forecast to 79 billion yen (US$988 million) for the year to August from 81.5 billion yen (US$1.02 billion) made three months earlier.

The full year outlook for sales has also been cut to 929.5 billion yen (US$11.67 billion) from 941.5 billion yen (US$11.82 billion).

The lowered profit forecast is largely due to Uniqlo’s seven per cent same-store year-on-year sales fall in June in Japan, where temperatures dropped and a typhoon hit, causing sales of summer clothing lines to sag.

Although temperatures are expected to rise in the coming months, Fast Retailing CFO Takeshi Okazaki said the company will see a slight fall in same-store sales and it plans to discount summer clothing to move backlogged stock.

Uniqlo in the US has also been hit by losses due to the high cost of prime flagship retail locations and heavy promotional activity. Uniqlo’s multiple stores in New York also cannibalised its sales in the US.

Fast Retailing aims to add 200 to 300 new stores annually to its overseas network of 275 in a bid to exceed its domestic network of 849 stores by 2015.

GB