By Ritsuko Ando
TOKYO (Reuters) - Japan's Fast Retailing Co cut its full-year outlook after worse than expected quarterly results, hit by Hong Kong protests and a South Korean consumer boycott that dented sales at its Uniqlo stores.
The company had come to depend on its Asian growth, especially in China, where Uniqlo's mix of affordable basics and occasionally trendy items proved a massive hit among the burgeoning middle class.
At home, Uniqlo has faced a saturated market and weak consumer spending. It has also struggled to build brand recognition in the United States, though the company expects its North America business to turn profitable this year.
A weaker yuan and violent protests in Hong Kong during its financial first quarter to Nov. 30 served hit operating profit in the Greater China region, which includes its Hong Kong stores.
The company's South Korea business, meanwhile, fell into the red after a prolonged boycott of Japanese goods, it said.
Annual operating profit was forecast to fall 5% to 245 billion yen ($2.24 billion), against a previously expected rise to 275.0 billion yen for the year to the end of August.
Its first-quarter operating profit fell to 91.7 billion yen from 104.7 billion yen a year earlier. That compared with the market's consensus forecast of 110 billion yen, according to Refinitiv data.
There were bright spots, however, including an expected improvement in the United States and a 44% leap in quarterly operating profit at GU, its fashion line focusing on younger shoppers.
It also reported strong sales in markets such as Australia and India, where it opened new stores during the quarter, and reiterated its ambition to become the world's biggest fashion retailer.
Fast Retailing's main rivals are Spanish giant Inditex, which owns Zara, and Sweden's H&M. The Japanese company believes it has a shot at beating competitors by appealing to a broad demographic and focusing on practical pieces rather than catwalk trends.
"The group’s medium-term vision is to become the world’s number one apparel retailer," it said in a statement. "We continue to increase Uniqlo store numbers in each market."
(Reporting by Ritsuko Ando; Editing by Himani Sarkar and David Goodman)