The operator of the Uniqlo casual clothing store chain said Tuesday it has revised downward its earnings forecast for the current business year due to significant declines in sales.
Fast Retailing Co. said the forecast marks the first decline in sales and profits on a year-on-year basis in 14 years.
The company also announced that it will enter the domestic grocery market in the fall in a bid to expand its business scope.
According to the firm, its unconsolidated pretax profits in the year to Aug. 31 will decrease 33.3 percent from a previous projection to 80 billion yen. Its unconsolidated net profits will fall 33.8 percent from an earlier projection to 45 billion yen.
Sales will come to 390 billion yen, down 18.8 percent from a previous forecast.
To reverse the trend, Fast Retailing President Tadashi Yanai said the company will reinforce development of new clothing products and conduct more precise demand projections.
Speaking about its new attempt to enter the food business, Yanai said he is not sure if the new business would be a success, but the attempt is important to ensure the continued growth of the company.
The Yamaguchi-based company will commission domestic farmers to produce crops, including tomatoes and watermelons, with a special agricultural method developed by Nagata Nogyo Kenkyusho, a agricultural research company based in Tokyo's Adachi Ward, and its two group firms in Hamamatsu, Shizuoka Prefecture.
The produce will be retailed at grocery stores set up by the company and through mail order and the Internet. Fast Retailing expects to earn 1 billion yen to 2 billion yen from the new business during the first year of operation, company officials said.
"Applying our business model for Uniqlo, where we control everything from product designs to manufacturing to retailing, we'd like supply consumers high quality vegetables and fruits at reasonable costs," Yanai said.