TOKYO, Sept 4, 2007 (AFP) - Japan's Fast Retailing, the operator of Uniqlo casual clothing shops, set its sights Tuesday, September 4th on buying a major Western brand as it unveiled plans for a third global flagship store in Paris.

Uniqlo's collection in Tokyo autumn-winter 2007/2008 - Photo : Ken Shimizu/AFP

Fast Retailing has set a goal of doubling its global sales by 2010 through expansion both in Western cities and in Asia to compensate for slack growth in Japan.

The Japanese company last month dropped out of the bidding war for the prestigious Barneys New York department store, declining to match a 942.3-million-dollar offer from Dubai investment firm Istithmar.

But the company said it still had a budget of 300 to 400 billion yen (2.5 to 3.5 billion dollars) for acquisitions.

"Our strategy of mergers and acquisitions is aimed at restructuring our business portfolio, which relies heavily on the domestic mass market," chairman and chief executive Tadashi Yanai told a news conference.

"For this purpose, we will seek mergers and acquisitions of Western brands that can develop globally."

Fast Retailing said it will open a flagship Uniqlo store on Oxford Street in London on November 7 and a shop one month later in Paris' La Defense business district.

Fast Retailing said it would also eventually open another store in central Paris, which would be Uniqlo's third "global flagship store" after the upcoming one in London and one opened in New York's Soho last year.

It did not immediately announce an opening date for the Paris flagship, saying in a statement that possible locations are of "historical value requiring careful and extensive refurbishment."

Uniqlo has also branched out in China and South Korea in its bid to overtake global casual wear leaders such as Spain's Zara and Sweden's Hennes and Mauritz.

Fast Retailing had initially topped offers for Barneys by Istithmar, which is partially owned by the government of oil-rich Dubai, before deciding the price was too high.

"Through the proposal to take Barneys, we didn't lose anything," Yanai said.

"What we gained is that we could raise the visibility of our company, and we showed our commitment to the US luxury market, which I believe will contribute to our next chance at mergers and acquisitions," he said.

Fast Retailing set the mid-term target for global sales of one trillion yen and recurring profit of 150 billion yen in 2010.

The company posted net sales of 448.8 billion yen in the year to August 31, 2006.

The market had a lukewarm response to the business strategy, announced late in the trading day.

Fast Retailing shares slipped a sharp 240 yen or 3.57 percent to 6,490, a steeper fall than the 0.63 percent drop on the Tokyo Stock Exchange's benchmark Nikkei-225 index.

Uniqlo flourished during Japan's decade-long slump in the 1990s by selling cheap yet good quality clothing, mainly manufactured in China, as years of deflation made consumers more frugal.

Fast Retailing's past acquisitions included France's Petit Vehicule, the maker of Princess tam.tam lingerie.

But while seeking acquisitions, Yanai also said Fast Retailing was ready to sell off domestic businesses which were unprofitable.

"I hope all businesses become profitable, but I need to give up the ones which fail to be profitable within a year," Yanai said.

He named Cabin, a clothing company whose brands aim at working mothers, and shoe company OneZone as among the unprofitable Japanese units.

by Kyoko Hasegawa