By  on April 5, 2010

TOKYO — Fast Retailing Co. Ltd.’s shares fell more than 10 percent on Monday as investors digested disappointing March comps at Uniqlo.

Blaming cold weather for low shopper turnout, Fast Retailing said Friday Uniqlo’s same-store sales slid 16.4 percent last month. Those figures refer exclusively to Uniqlo’s business in Japan.

On Monday, Fast Retailing’s shares lost 10.6 percent, or 1,770 yen, to close at 14,920 yen, or $157.62 at current exchange, on the Tokyo Stock Exchange. The overall Nikkei index rose 0.47 percent. (For more on global stocks, see page 14.)

Yukimi Oda, a Tokyo-based analyst at Morgan Stanley, said Monday he cut his earnings forecasts for Fast Retailing but still expects the company to beat its own guidance.

Morgan Stanley estimates that Fast Retailing’s first-half operating profit will come in at about 93 billion yen, or $982.5 million, beating the retailer’s target of 89 billion yen, or $940.2 million. Fast Retailing’s second-quarter numbers are due Thursday.

Morgan Stanley cut its full-year operating profit forecast for the Japanese retailer by about 4 percent to 136.9 billion yen, or $1.45 billion. The bank said it expects same-store sales in the second half of the year to grow only 0.3 percent compared with an earlier forecast of 8.8 percent.

As for Uniqlo’s drop in March sales, Oda attributed the decline to colder than normal temperatures and said “the industry as a whole is experiencing fairly lackluster demand for spring items.” He went on to state that Uniqlo’s spring merchandising mix, including jeans and innerwear, featured less-expensive items than a year earlier.

A spokeswoman for Fast Retailing declined comment on Monday’s stock market performance but said the company will likely address the drop in sales during Thursday’s press conference on earnings.

Meanwhile, Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo, said he doesn’t think the drop in same-store sales for March is indicative of a long-term slowdown for Fast Retailing.

“February and March are not important months for the company,” he said. “We might see a difficult comparison in the short term, as last year’s sales were going up very rapidly.”

Ogawa also blamed the sudden drop in sales on unseasonably cold weather in Japan. But he predicted “there will be some pickup” as temperatures rise.

Goldman Sachs analysts Sho Kawano and Keiti Wei said Monday they cut their operating profit estimates for Fast Retailing’s fiscal year ending Aug. 31 by 5 percent and that of the year ending Aug. 31, 2011, by 4 percent.

“It looks as though our concerns of a domestic sales slowdown are being realized, with a lack of customer pullers on the scale of [fall-winter’s] HeatTech this spring and summer,” the analysts wrote. “[There’s a] growing consumer awareness of competitors’ low-price innerwear.”

They went on to state they will be looking for news about a possible acceleration of Uniqlo store openings outside Japan. Uniqlo’s international presence includes stores in New York, Paris, London, Singapore and China. The company last Friday opened its first Russian store in Moscow.

“Uniqlo International has major profit potential and we are monitoring scale and attainment. We think openings are on schedule, with an urban focus,” they said.

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