TOKYO -- After raising prices two years in a row, Uniqlo hoped recent reductions on certain items would bring back some of the shoppers it had driven away. So far, not so good: The Japanese casualwear chain saw domestic customer traffic fall 8.6% on the year in March, on a same-store basis.

Sales dropped by 0.3%, the first on-year drop in three months, parent Fast Retailing said on Monday.

Uniqlo in early February cut prices on standard items -- such as oxford shirts, jackets and chinos -- by 300 yen to 1,000 yen ($3 to $9). The change appears to have been a rush job. Fast Retailing Chairman and President Tadashi Yanai and other executives apparently made the decision in late January. The cuts took effect even before stores had time to change their price tags.

Stores put up signs that read, "New prices available, anytime."

Despite concerns that the discrepancy between tags and checkout prices would confuse customers, the priority was to get prices down as soon as possible. The abrupt decision suggests management may regret charging more for all products, including some that did not warrant it.

What higher-wage wave?

In 2014, Uniqlo raised its domestic prices by 5% across the board. The following year, it carried out a 10% hike. Yanai said the increases were crucial for maintaining product quality amid a sharp rise in raw materials costs, coupled with yen depreciation. With Japanese employers starting to boost wages, Yanai thought consumers would be willing to pay more.

Since the price increases, though, Uniqlo has struggled to keep customers coming in the door. During the year through March, it posted year-on-year gains for only three months.

In late December, Yanai expressed strong concern about the performance of the business. Uniqlo had been offering discounts from Fridays to Mondays, but this was not cutting it.

Management then opted to lower the regular prices on dozens of items. The chain still runs weekend promotions, but less frequently and on a smaller selection of products.

In any case, winning back customers, it turns out, is not as simple as lowering prices. A man in his 30s who used to buy Uniqlo apparel said he was unaware of the reduction. Somehow, Uniqlo needs to restore its reputation for offering good value.

Rising rival

While Uniqlo fights through this rough patch, another Japanese fast-fashion chain is logging gains. Shimamura said on Monday that its group profit rose in the year ended February -- the first increase in three years. It said same-store sales in March surged 11.8% on the year.

Most Shimamura products sell for 900 yen or less. On average, each customer spends about 2,600 yen. President Masato Nonaka chalked up the recent run of success to strong demand for inexpensive apparel.

Uniqlo's price hikes coincided with Prime Minister Shinzo Abe's efforts to bring the country out of deflation. But the chain's woes highlight the perils of raising prices in the current environment and may prompt other businesses to rethink their strategies.