* Q1 operating profit jumps 17 percent to Y56.6 bln
* Raises operating profit forecast to record Y147.5 bln
* Uniqlo's overseas operating profit up 53 pct to Y8.4 bln
* Chilly autumn temps, price cuts, lift Uniqlo Japan sales
* Fast Retailing shares jumped more than 50 percent in 2012
By James Topham
TOKYO, Jan 10 (Reuters) - Fast Retailing Co raised its annual profit forecast to a record after sales rose at home outlets of the Japanese retailer's flagship Uniqlo casual clothing chain and price cuts and chilly autumn weather spurred a quarterly profit jump.
Uniqlo, which has been pushing to expand abroad as its home market shrinks, also posted strong gains from its overseas operations, mainly due to strong sales in Greater China and South Korea, although they remain a small portion of its overall earnings.
The profits add to Fast Retailing's deep coffers as it continues a global push of its in-house brand of affordable basics in hopes of passing Zara owner, Inditex S.A., Hennes & Mauritz AB and Gap Inc to become world's top clothing retailer by 2020.
Asia's top clothing company lifted its operating profit forecast to a record 147.5 billion yen ($1.68 billion) from its earlier estimate of 143.5 billion yen for the full year to August. That compares with the average estimate of 142.8 billion yen in a poll of 22 analysts by Thomson Reuters I/B/E/S.
Uniqlo already dominates Japan's retail clothing market through its 800-plus domestic store network, but the merchant is looking to increase its presence abroad by expanding its overseas outlets by nearly 50 percent to more than 430 by August.
Takeshi Okazaki, CFO of Fast Retailing, said sales in China slowed between September and mid-October amid tensions over a territorial dispute, but they recovered as the weather turned colder, while Uniqlo sales in Hong Kong, Taiwan, South Korea and Southeast Asia were strong as expected.
"Our previous outlook for the overseas Uniqlo business was conservative based on expectations for an economic slowdown in China and South Korea especially, but saw better than expected results across Asia and this is why we are upgrading our full-year outlook," Okazaki told a news conference.
Fast Retailing said Uniqlo's overseas unit posted a 53.2 percent increase in operating profit to 8.4 billion yen for the September-November quarter, but its contribution was small compared with the Japanese operations, which earned a 39.9 billion yen operating profit.
Fast Retailing, which has the biggest weighting on the Nikkei share average, posted a September-November operating profit of 56.6 billion yen ($644.32 million), a 17 percent jump year-on-year, after sales during the period rose 5 percent at Uniqlo outlets in Japan open more than a year.
The profits for the quarter, which typically make up a third to half of the firm's annual group profit, comes as the merchant boosts a free cash flow of 11.2 percent, more than double the industry average, according to Reuters data.
Other brands in the Fast Retailing stable, which includes the cut-price clothing chain g.u., also saw robust growth for the quarter, posting a 16.6 percent increase in operating profit to 6.2 billion yen.
Fast Retailing, run by Japan's richest man, Tadashi Yanai, aims to generate 5 trillion yen in sales by 2020, up from the slightly more than 1 trillion yen projected for the current business year, as it rapidly expands its Asian presence.
The speciality retailer, known for its affordable basics like camisoles with built-in bras, fleece jackets, and heat-trapping thermal underwear, is trying to reduce its reliance on the Japanese market where the outlook is murky due to a declining population and consistent deflation.
Underscoring the low level of growth in Japan, Japanese retail sales ticked up 1.3 percent year-on-year in November, a six-month high, government data showed late last month.
Shares of Fast Retailing jumped more than 50 percent in the 2012 calendar year compared with a 23 percent surge in the benchmark Nikkei. Before the earnings announcement, Fast Retailing's shares closed down 1.1 percent versus a 0.7 percent rise in the Nikkei.
Fast Retailing carries a 12-month forward price-to-earnings ratio of 26.4, way above the average of 13 for Japanese equities, according to Thomson Reuters Datastream.