Japanese apparel group Fast Retailing Co has cut its full-year net profit forecast more than 10 percent to account for losses at their premium denim brand, J Brand. The lower forecast comes despite the strong performance of its flagship brand, Uniqlo.
"We weren't effective enough in competing in the increasingly tough premium denim market," Chief Financial Officer Takeshi Okazaki told a news conference in Tokyo.
Therefore, the company has reduced its full-year net profit target from 88 billion yen to 78 billion yen, to account for a possible 10 billion yen impairment loss on its J Brand U.S. jeans operation.
Fast Retailing bought an 80 percent stake in the high-end denim brand for 290 million dollars in 2012, with label managers holding on to the remaining stake.
Actually, strong sales in its flagship Uniqlo stores helped FastRetailing achieve third-quarter operating profit growth of 21 percent, in line with forecasts, reported Reuters.
Asia's biggest fashion retailer has seen how tireless losses at J Brand might hint the potential risks of scooping up non-homegrown brands for Fast Retailing in its drive for international growth.
Fast Retailing in May assigned Theory chief executive Andrew Rosen to also oversee J Brand, replacing the brand's founder and former CEO Jeff Rudes, who resigned.