By  on July 11, 2008

TOKYO — Fast Retailing Co. Ltd. posted higher profits and sales for the first nine months of the year, citing the success of Uniqlo's new advertising campaigns and emphasis on basic garments like cotton T-shirts and jeans.

Net profits rose 26.8 percent to 40.08 billion yen, or $369.9 million, from 31.62 billion yen, or $266.6 million, for the nine-month period ending May 31. Sales rose 11.4 percent to 458.11 billion yen, or $4.23 billion, from 411.23 billion yen, or $3.47 billion.

Dollar figures were converted from the yen at average exchange rates for the respective periods.

The company issued an upbeat forecast for the remainder of the fiscal year ending Aug. 31, projecting that operating profit will increase 23.4 percent to 80.1 billion yen, or $746.4 million at current exchange, while revenues will grow 11.5 percent to 585.5 billion yen, or $5.46 billion, on a consolidated basis.

Operating profit for the first nine months rose 27.7 percent to 75.78 billion yen, or $699.4 million, from last year's 59.32 billion yen, or $500 million, thanks in part to increased profitability at Uniqlo in Japan. Same-store net sales increased 4.2 percent year-on-year in the third quarter from March to May. Fast Retailing attributed the growth to the market's appreciation of the chain's high-quality, functional material garments as well as better organized store displays and a new advertising campaign for bra tops and flattering bottoms.

"These were the first [attempts] for Uniqlo to appeal only to female customers through TV commercials and helped attract customers," said the firm.Uniqlo's store openings and closures were conducted roughly to plan with a net increase of 11 stores, boosting the total number to 741 direct-run stores as of May 31, 759 including franchise stores.

Uniqlo International posted a "slight profit" in the third quarter from March to May with net sales rising 71.8 percent, the company said. "Within the segment, business in the Asian region of China, Hong Kong and South Korea continues to expand favorably, and the financial balance at our U.S. operation has also improved since the opening of our global flagship store in New York in November 2006," the company said.

Still, Fast Retailing did face tougher conditions for other brands in its portfolio, especially in Europe. "The developer of the casualwear Comptoir des Cotonniers brand in France and other parts of Europe failed to reach its sales target owing to the deteriorating consumption environment in Europe," the company said. "However, it still managed to generate a rise in both revenue and profit."

Meanwhile, Fast Retailing announced that it will merge three subsidiaries, G.U. Co. Ltd., Onezone Corp. and Viewcompany Co. Ltd., to better develop footwear and low-priced casual apparel categories. But the operation will be a costly one, generating extraordinary losses of 1.8 billion yen, or $16.8 million, in the current fiscal year.

The firm also said it finalized the sale of a 60 percent stake in Aspesi Japan Co. Ltd. to Alberto Aspesi & C. SpA in Italy for an undisclosed price. The company said the sale would only have a "minimal" impact on full-year earnings.

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