Fast Retailing Co, owner of clothing brand Uniqlo, forecast 18 per cent growth in annual profit next year, as it plans to expand in key markets including China, anticipating that the rising cost of living will make shoppers more price conscious.

Fast Retailing, known for its fleece jackets and inexpensive basics, plans to open 80 new stores a year in Greater China which includes Hong Kong and Taiwan, 20 stores in North America, and 10 in Europe, its Chief Financial Officer Takeshi Okazaki told reporters.

It already has 930 Uniqlo outlets in mainland China – more than in Japan – making it a bellwether for retailers operating in the world’s second-biggest economy.

CEO and founder Tadashi Yanai told reporters on Thursday that the post-Covid world has changed dramatically and consumers are now putting greater emphasis on value over luxury after the company delivered forecast-beating record annual results.

“People are looking to reduce surplus things and frills and live simply in their own way,” Yanai said.

The company previously targeted 100 new store openings annually in Greater China. It currently has nearly 70 stores in both North America and Europe.

The strong results by the Japanese firm follows disappointing earnings from luxury group LVMH earlier this week due to rising inflation and economic turbulence that sparked a broader sell-off in luxury stocks in Europe.

Fast Retailing reported that full-year operating profit rose 28 per cent to reach its second consecutive record, aided by a post-pandemic recovery in China.

Profit was $2.56 billion in the 12 months through August compared with $ 1.985 billion, the previous all-time high, a year earlier.

The result was slightly above the consensus forecast of $2.502 billion, according to the average estimate of 12 analysts collected by LSEG, as well as the company’s previous guidance of $2.471 billion.

Operating profit is expected to rise to reach another record of $3 billion next fiscal year, the company said.

The result followed record third-quarter earnings in July when the company raised its full-year forecast as its business in China continued to recover from a pandemic slowdown.

When its Chinese operations suffered during strict Covid-19 restrictions, Fast Retailing put increased focus on markets in North America and Europe.

The company has an aggressive growth strategy for North America, where its regional chief Daisuke Tsukagoshi was elevated to president of the Uniqlo brand last month.

Yanai, 74, said Tsukagoshi was qualified to become a successor.

“He prioritises the shop floor,” Yanai said. “He is a man of action.”

Fast Retailing has also benefited from depreciation in the yen, down about 12 per cent against the dollar this year, which raises the value of its overseas sales.

Shares in Fast Retailing closed up 1.2 per cent prior to the results, versus a 1.75 per cent rise in the broader market.

Yanai, Japan’s richest man, holds about 19 per cent of the company’s shares and his family have a net worth of about $34 billion, according to Forbes.

• Reporting by Rocky Swift; Editing by Jamie Freed, Miyoung Kim and Simon Cameron-Moore, of Reuters.