TOKYO, Oct 11, 2007 (AFP) - Japan's Fast Retailing, the operator of Uniqlo casual clothing shops, said Thursday, October 9th its profit slipped in the past year despite its high-profile expansion push overseas.

Uniqlo concept store planned for London in November 2007

Fast Retailing Co. Inc. said it cashed in on booming demand from Chinese customers but that its sales slumped at home and were stagnant in the United States and Europe, where it has been opening new stores.

The company reported 64.6 billion yen (550 million dollars) in operating profit for the year to August, a fall of 11.7 percent and below its own downwardly revised forecast of 70.7 billion yen.

Net profit slipped 21.4 percent to 31.78 billion yen.

"We had unpredicted weather condition and a lack of newly designed products on the shelves," chairman and chief executive Tadashi Yanai said, referring to an unusually warm winter and the late arrival of summer this year in Japan.

But Fast Retailing reported 525.2 billion yen in revenue for the year, thanks to brisk sales overseas which almost doubled in the year.

"We had a brisk performance in Asia in contrast with the United States and Europe, where the business stagnated," Yanai told a news conference.

"I see the consumption economy in China has finally gone into high gear," he said. "We will open many more stores in Hong Kong, Shanghai and Beijing."

For the year to August 2008, the company forecast 72.8 billion yen in operating profit, a rise of 12.7 percent, on revenue of 570 billion yen.

Fast Retailing has set a goal of doubling its global sales by 2010 through expansion both in Western cities and in Asia to compensate for slack growth in Japan.

The operator of Uniqlo, often referred to as the Japanese equivalent of Gap, has set its sights on overtaking global casual wear leaders such as Spain's Zara and Sweden's Hennes and Mauritz.

It will open a flagship Uniqlo store on Oxford Street in London on November 7 and a shop one month later in Paris' La Defense business district.

Fast Retailing opened a first global "flagship store" in New York's Soho last year.

"Unless we grow into one of the main players that operate business worldwide, we would have no future," Yanai said.

But the Japanese company dropped out of the bidding war in August for the prestigious Barneys New York department store, declining to match a 942.3-million-dollar offer from Dubai investment firm Istithmar.

Uniqlo flourished during Japan's decade-long slump in the 1990s by selling cheap yet good quality clothing, mainly manufactured in China, as years of deflation made consumers more frugal.

Fast Retailing has also acquired apparel houses, including France's Petit Vehicule, the maker of Princess tam.tam lingerie.

In the bid to transform from a casual clothing retailer to an operator of international brands, the company aims to sell off domestic businesses which are unprofitable.

by Harumi Ozawa