Fast Retailing Co. Chairman Tadashi Yanai caved in to reality and scrapped his 8-year-old target for the Uniqlo casual-wear owner to hit ¥5 trillion ($48 billion) in annual sales by fiscal year 2020.
The billionaire, who wants to make Fast Retailing the world’s largest seller of clothing, on Thursday slashed that revenue goal for the fiscal period ending August 2021 by 40 percent as the company reported annual sales and net income forecasts that missed estimates.
The clothing retailer has struggled with weak demand in Japan, the negative impact of a stronger yen on overseas sales, and rising competition from e-commerce operators. Yanai said Fast Retailing will respond by modernizing its distribution systems to shorten delivery times for online shoppers.
“It will take a bit longer to achieve ¥5 trillion,” Yanai, Japan’s richest person, said in a briefing in Tokyo to discuss earnings on Thursday.
Fast Retailing reported net income of ¥48.1 billion for the year ended in August, the lowest since 2008, after lowering its forecast three times as the Japanese currency surged. Sales gained 6.2 percent to a record ¥1.79 trillion.
After sales slumped in the first half, the company shifted its strategy back to offering regular low prices rather than big discounts on selected items. Earlier this year, Yanai vowed to offer the “lowest possible price” at Uniqlo stores after efforts to raise quality along with prices failed to drive up earnings.
Fast Retailing’s shares closed 4.98 percent higher at ¥34,800 on Friday in Tokyo, after it forecast record operating income for the current fiscal year on Thursday following the close of the market.
The stock has declined 20 percent this year, compared with a 13 percent slump for the benchmark Topix index.
Net loss was ¥23 billion in the three months ending August, compared with a loss of ¥22.3 billion in the same period last year.
The company recorded a foreign exchange loss of ¥11 billion in the fiscal year and a ¥13.8 billion impairment loss at its J Brand premium denim brand.
Yanai said in April he wants to expand Fast Retailing’s e-commerce worldwide, with an initial target for online sales to make up 30 percent of total revenue, up from 5 percent currently.
He didn’t give a time frame for the target.
About 20 percent of its sales in the U.S. are from e-commerce currently, while online sales contribution in Japan and South Korea are at 5 percent, according to the company.
On Thursday, Yanai said Fast Retailing will open a retail floor at its new distribution center in Japan that merges its physical boutiques with e-commerce by spring of 2017.
The company will also start offering same-day shipping for customers “soon,” Yanai said.