By Rocky Swift
TOKYO (Reuters) -The Japanese operator of the Uniqlo clothing chain booked its third consecutive year of record earnings on Thursday, with its leader laying out an aggressive plan for global growth.
After Fast Retailing crossed 3 trillion yen ($20 billion) in revenue for the first time, Chief Executive Tadashi Yanai said the company was aimed at domination in Western markets on its way to annual sales beyond 10 trillion yen.
"If we want to be truly the top global brand, we would not be able to claim that unless we can become number one in both of those regions, North America as well as Europe," said Yanai, who founded the Uniqlo brand 40 years ago.
Operating profit rose 31% to 500.9 billion yen ($3.35 billion) in the 12 months through August, beating the company's own forecast and the consensus estimate of 478.3 billion yen from 15 analysts polled by LSEG.
Fast Retailing said it expects operating profit to climb further to 530 billion yen in fiscal 2025.
Uniqlo, known for its fleece jackets and inexpensive undergarments, has benefited from a historically weak yen both at home and abroad. A tourism boom in Japan has led to a surge in duty free shopping, while revenue from its push into Western markets gets an added boost when translated back into yen.
The company's operating profit margins improved to 15% or higher in all its international segments on the back of higher brand visibility, said CFO Takeshi Okazaki.
Revenue and profit in Japan set records on strong demand of summer items as well as sharply higher sales to overseas visitors.
Fast Retailing's earnings have been less rosy in China, its biggest overseas market. With more than 900 stores on the mainland, the company has long been seen as a bellwether for the retail sector in the world's second-biggest economy.
Pandemic restrictions dragged on results there for years, but now the challenge is a sluggish economy that has weighed on consumer confidence.
The Greater China segment saw a slight increase in annual profit for the year. The company is scaling back store openings and adopting a scrap-and-build strategy to turn around underperforming locations.
Yanai, Japan's richest man, has long aimed to make Fast Retailing the world's biggest fashion retailer, with Zara owner Inditex (BME:ITX) and H&M (ST:HMb) standing in the way. He has said consumers are more focused on value than luxury in a post-pandemic world, a trend that would work in Uniqlo's favour.
Questions about who will succeed 75-year-old Yanai have swirled for years and gained traction of late amid a corporate governance push in Japan.
Yanai said he wanted the next leader to come up the ladder of the company and for his two adult sons to be responsible for governance.
Yanai was joined on the dais by Daisuke Tsukagoshi, who was promoted to president of the Uniqlo brand last year and has spoken of as a possible successor.
"I think he's doing a pretty good job," Yanai said of Tsukagoshi.
($1 = 149.1900 yen)