April 12, 2018 / 7:16 AM / 2 years ago

UPDATE 2-Japan's Fast Retailing lifts forecasts as it chases fashion crown

* Upgrades annual forecast to Y225 bln from Y200 bln

* Q2 operating profit grew 35 pct to around Y56.6 bln

* Strong growth at Uniqlo abroad and at home (Adds executive comments)

By Sam Nussey

TOKYO, April 12 (Reuters) - Japan’s Fast Retailing Co Ltd on Thursday raised its full-year profit forecast by 13 percent on the back of robust growth across Asia, as the owner of clothing chain Uniqlo continues to chase the top spot in global apparel sales.

Asia has become a major growth driver for Uniqlo as its affordable clothing lines, including breezy AIRism innerwear and lightweight down jackets, grow in popularity in China and Southeast Asia.

The region’s biggest clothing retailer now expects operating profit for the year through August to reach 225 billion yen ($2.11 billion) - about 2 percent higher than the average of 17 analyst estimates in a Thomson Reuters I/B/E/S poll.

The retailer’s appeal in the region could be its trump card as founder and Chief Executive Officer Tadashi Yanai looks to fulfil his ambition to overtake H&M and Zara parent Inditex to become the world’s top apparel retailer. The firm currently sits in third place, above Gap Inc.

“Asia’s era has finally arrived,” Yanai told a news conference in Tokyo.

Fast Retailing’s recent fortunes contrast with those of H&M, whose sales growth has stalled as it struggles to adapt to the shift to online shopping. Uniqlo will open its first store in the Swedish retailer’s home market later this year.

Uniqlo is also growing at home, with same-store sales in the first six months of its financial year rising 8.4 percent, boosted by demand for warm clothes during a particularly cold Japanese winter.

However a lack of warm clothing options at low-priced chain GU - which the firm hopes to build up to become a second Uniqlo - saw same-store sales fall slightly over the same period.

First-half online sales at Uniqlo Japan grew 31.6 percent year-on-year, forming 7.5 percent of total sales. The retailer said online sales would grow a further 30 percent in the second half of the financial year.

Overseas, Uniqlo said it wants to more than double the proportion of global sales made online from 9 percent currently by the year ending August 2023.

Online competition includes Start Today Co Ltd, operator of the Zozotown online mall, which has produced a skintight suit filled with sensors dubbed the Zozosuit which, once worn, allows customers to order custom-made jeans and t-shirts.

“The Zozosuit is fine but... we are diligently studying easier measurement methods like using smartphones or in-store,” Yanai said.

Now 69 years old, the Fast Retailing founder touched on the question of retirement, saying a system was pretty well in place to ensure a smooth handover and that he had no concerns over the current management of the company. He did not elaborate on timing.

Fast Retailing’s operating profit grew 35 percent to around 56.6 billion yen for the three months ended February, showed Reuters calculations based on company data. Analysts had forecast profit of 49.1 billion yen. ($1 = 106.8300 yen)

Reporting by Sam Nussey; Editing by Christopher Cushing

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