A day after a strengthening yen forced Fast Retailing Co to slash its full-year net income forecast by a quarter, the currency’s reversal, along with signs of recovery at the company’s Uniqlo clothing business, drove the shares up by their daily limit.
The shares rose 18 percent to reach ¥32,660 at the close in Tokyo trading, the most since 1998, adding ¥530 billion (US$5 billion) to the market value of Asia’s largest clothing retailer.
The Nikkei 225 Stock Average rose 0.7 percent.
Photo: AFP
On Thursday after the market closed, the retailer posted third-quarter sales and operating income that beat analysts’ estimates.
“The recovery in six months is amazing. The business has recovered faster than expected,” Nomura Holdings Inc analyst Masafumi Shoda said in an interview.
Confidence about Uniqlo, in particular the brand’s operations in Japan, has risen, Shoda said.
Fast Retailing chief financial officer Takeshi Okazaki forecast that strength in the Japanese currency would lead to a ¥37 billion foreign-exchange loss for the fiscal year ending next month.
The rising currency had already helped push the company’s shares down 44 percent this fiscal year as of the close on Thursday.
The company’s business operations improved, despite the forecast cut, Okazaki said.
The company’s forecast is based on an exchange rate of ¥114.3 per US dollar for the fiscal year, he said.
That compared with a company projection in April of ¥120.5 per US dollar.
Okazaki said the company would need to review its distribution across Europe, but it would not make substantial changes to its business plan there.
The yen fell as much as 1 percent to ¥106.32 per US dollar at 2:20pm yesterday, headed for its biggest weekly drop since 1999 as speculation increased that Japanese Prime Minister Shinzo Abe’s stimulus plan would weaken the currency and better-than-expected Chinese economic data sapped demand for havens.
Should the yen “stabilize,” it would not be an issue for Fast Retailing’s earnings going ahead, Shoda said.
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