Japanese clothing chain UNIQLO has world domination in its sights and the latest set of results from its parent company show that’s not such a crazy dream.
Fast Retailing, which owns UNIQLO, reported a whopping 48% rise in pre-tax profit to ¥117.38 billion (£640 million) in the year to August 31. Revenue rose 21.6% to ¥1.68 trillion (£91 billion).
The big jumps were driven by booming sales in China and South Korea.
Billionaire chairman Tadashi Yanai wants to turn Asia’s biggest clothing retailer into a world leader with sales of 5 trillion yen by 2020 and the company is rapidly expanding its footprint in markets it’s already in and opening flagship UNIQLO stores in countries it’s yet to crack. The company plans to open 195 new stores by next August.
Fast Retailing, which also owns brands like J Brand and Gu, is already huge. It makes up more than 10% of the value of the Japan’s Nikkei stock exchange where it is listed.
But there’s one big problem at the moment — the US.
Here’s Fast Retailing:
Sales fell short of target and operating losses expanded at UNIQLO USA. This was partly due to the rapid expansion of the store network, with 17 new stores opening in fiscal year 2015, and due to the fact that the UNIQLO brand is still comparatively new to the US market and not yet widely recognised.
The US is a highly competitive market where brand counts for a lot. What’s more, UNIQLO’s brand is pretty subtle. It’s known for no-nonsense, high-quality basics — polo shirts, Japanese denim, shirts.
As a result of difficulties in the US, Fast Retailing has put out lighter than expected forecasts for the year ahead. The group is forecasting revenue of ¥1.9 trillion (£100 billion), a 13% rise on this year, and pre-tax profit of ¥200 billion (£1 billion), up 10% on this year.
Fast Retailing shares closed down 2.3% in Tokyo overnight.