Tokyo: Fast Retailing Company, the operator of Japan's largest clothing chain, fell in Tokyo trading after domestic sales at its Uniqlo casual clothing stores declined the most in seven years.
The shares dropped 11 per cent, the most since January 2007, to close at 14,920 yen (Dh578.75) on the Tokyo Stock Exchange. Same-store sales fell 16.4 per cent in March from a year earlier as demand dropped for parkas and other spring items.
President Tadashi Yanai, Japan's richest man, has relied on a series of hit products to propel sales, overcoming stagnant wages and household spending in the world's second-largest consumer market. New products may not repeat the success of last winter's HeatTech thermal wear that sold almost 50 million units.
"It's been a weak season for Uniqlo with no hit products to rely on," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Limited in Tokyo. "The stock may be too expensive, even if it has potential to grow more overseas."
UBS AG cut its rating on the Yamaguchi, Japan-based retailer to "sell" from "buy", and reduced its 12-month price target to 13,000 yen from 18,000 yen. Morgan Stanley lowered its target price 12 per cent to 15,500 yen.
"It looks as though our concerns of a domestic sales slowdown are being realised," Sho Kawano, a Tokyo-based analyst at Goldman Sachs Group Incorporated, said in an April 5 report. There's "a lack of ‘customer pullers' on the scale of HeatTech this spring and summer".
Kawano cut his 12-month price target on Fast Retailing shares to 14,300 yen from 15,200 yen, while maintaining a "neutral" rating.
Cold weather contributed to the fall in March spring-fashion sales, the company said. It was the biggest monthly sales decline since March 2003.
