Fast Retailing Co, Asia's largest apparel retailer, posted a 22 percent rise in quarterly profit but cut its full-year forecast below market expectations due to weaker-than-estimated sales at its Uniqlo chain in Japan.

Photo: Uniqlo

The company, which competes with Spain's Inditex, Sweden's Hennes & Mauritz and U.S.-based Gap, reduced its operating profit forecast to 131.50 billion yen ($1.6 billion) for the year to August from 138 billion yen. That is lower than the average estimate of 136.1 billion yen in a poll of 25 analysts by Thomson Reuters I/B/E/S.

For its March-May third quarter, the Japanese speciality retailer booked an operating profit of 27.5 billion yen, up from 22.5 billion yen a year earlier. But same-store sales at its Uniqlo outlets in Japan, its main profit driver, fell 5.4 percent over the same period as cool spring temperatures hit sales of summer clothing.

Fast Retailing dominates the apparel retail market in Japan through its Uniqlo chain, which offers relatively affordable basics such as camisoles with built-in bras, Capri pants and sweat-absorbing undershirts. The company is working to reduce its reliance on the Japanese market, where the outlook is murky due to a declining population and chronic deflation.

At its Uniqlo stores overseas, third-quarter operating profit rose 20 percent. By contrast, operating profit at its domestic Uniqlo stores fell 1.2 percent.

Fast Retailing, which had 275 Uniqlo outlets overseas at the end of May, compared with 849 in Japan, aims to open 200 to 300 new Uniqlo stores overseas annually, most of them in Asia.

Shares of Fast Retailing have jumped more than 12 percent in the year to date, higher than a roughly 7 percent rise in the Tokyo's benchmark Nikkei average.

Prior to Friday's announcement, Fast Retailing shares ended flat, against a 0.7 percent fall in the Nikkei.