Despite posting a 0.8% fall in its second-quarter profits, Fast Retailing says it is still confident of meeting its full-year forecasts after warm weather lifted sales of summer clothing at its Uniqlo casual clothing chain.
Net sales for the group as a whole rose 3.5% to $2.46 billion in the three months from March through May. But net income slipped to $148 million from $149 million a year earlier, and operating income fell 4.6% to $284 million.
Operating income at Uniqlo Japan also fell 11.2% to $261 million, as the March earthquake and cool weather in April and May pushed same-store sales down 1.9%.
The firm was also forced to cut prices on spring inventory as a result of the earthquake, and this combined with higher cotton and raw material costs to push gross profit margin down by 3 points.
Overall, the company said Uniqlo Japan sales actually increased 0.7% in the quarter, although this came in below target.
Demand has been helped by the company’s focus on innovative product lines, with 70 million Heatech garments and 36 million functional summer innerwear items like Sarafine, Silky Dry and Style Up, sold so far.
But Uniqlo’s international operations saw “significant” gains in both sales and income during the quarter. And a strong performance from the Theory label kept the Global Brands unit on track.
While the Uniqlo Japan operation fell short of quarterly targets, Fast Retailing says sales of summer items have been buoyant since the weather grew hotter in July — including its Super Cool Biz-related clothing.
“Therefore, we do still expect to be able to achieve our forecast for a rise in both sales and income in the second half,” the company said.
For the full year to August 2011, it expects net sales to increase 2.6% to $10.57 billion, and consolidated operating income to fall 8.2%.
Fast Retailing owns the Uniqlo chain and the Theory brand, among other businesses.