27
Fashion Jobs
By
Reuters
Published
Apr 5, 2010
Reading time
2 minutes
Download
Download the article
Print
Text size

Fast Retailing shares plunge after March sales dive

By
Reuters
Published
Apr 5, 2010

TOKYO, April 5 (Reuters) - Shares of Fast Retailing (9983.T) tumbled 9 percent after its Uniqlo budget fashion chain posted in March its biggest sales drop in seven years as cold weather hurt sales of spring clothing.

Fast Retailing
Photo: www.uniqlo.co.uk

The 16.4 percent year-on-year decline in sales snapped a trend of generally robust growth since 2008 on the back of hit products like its "Heattech" line of basic garments made of heat-retaining fabric.

It was the biggest monthly decline since March 2003, with sales of light jackets sliding after robust sales of the items a year earlier.

"Momentum (of sales growth) will inevitably slow as it faces high year-earlier hurdles ahead, so it cannot support the stock's valuation," said Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management.

On Friday 2 April, before the March sales announcement, Fast Retailing shares ended at 16,690 yen, more than six times its book value. By contrast, Seven & I (3382.T) and other major Japanese retailers are traded around their book values.

Investors on Monday 5 April snapped up some retail stocks that had been overshadowed by Fast Retailing.

Shares of apparel chain operator United Arrows (7606.T), whose same-store sales rose 4.1 percent in March, soared 6.8 percent to 1,102 yen.

Osawa said there may be a shift for now towards undervalued retail stocks but he remained upbeat on Fast Retailing over the long haul.

"I don't think Uniqlo will go downhill. Its solid growth prospects have not changed," he said.

Fast Retailing has been aggressively opening stores in China to tap growing demand there. It also opened its first Uniqlo store in Russia last week, with an eye on India and Brazil next.

Fast Retailing was down 9.2 percent at 15,150 yen by the midday break, the biggest percentage drop since December 2008. The stock was the largest percentage loser on the Nikkei 225 .N225, which gained 0.5 percent. (Reporting by Taiga Uranaka; Editing by Chris Gallagher)

© Thomson Reuters 2024 All rights reserved.