Think functional fashion that focuses on casual wardrobe staples and you’re probably imagining Gap – the stylish San Francisco fashion house with stores worldwide. However, there could be change at the top, with Japan’s Uniqlo brand making headway – and increased profits – in the US and globally.
Uniqlo – one of eight brands owned by holding company Fast Retailing and one of the world's most valuable retailers – has sales expectations for this year of around US$25 billion, up 18%, while Gap’s revenue is on the slide, with a double digit drop expected as revenues fall to around US$15 billion.
Gap, a portfolio of billion-dollar lifestyle brands including Old Navy, Gap, Banana Republic, and Athleta, and the largest specialty apparel company in the US, recently posted their second quarter fiscal 2023 financial results. Net sales were US$3.55 billion, down 8% compared to last year. Store sales decreased 7% and online sales 11%. The company was also impacted by the sale of Gap China.
Compare that with Fast Retailing, which saw revenue soar 21% in the nine months to 31 May 2023, with operating profit up 22%.
Uniqlo profits drop in Japan but boom internationally
The founding of Uniqlo was inspired by Gap, in fact.
Founder and President of Fast Retailing, Tadashi Yanai, took inspiration from European and US functional fashion brands like Gap, Benetton and Espirit to open Uniqlo’s first store in Japan’s Hiroshima in 1984.
Now, nearly four decades later, Uniqlo has expanded operations not only throughout Japan, but to 22 countries across Europe, North America, Asia and ANZ.
And while Uniqlo Japan’s operating profits is contracting (-5.7% in the three months to May 2023), global regions are reporting strong results.
In the three months to May, the Greater China region achieved considerable rises in revenue and profit, while mainland China market saw same-store sales rising over 40% YoY.
And in Southeast Asia, India and Australia, revenue and operating profit also expanded, with operations in Singapore, Thailand, India, and Australia all performing particularly well.
Last year, Uniqlo said it intended to have 200 stories in the US, up from just 57. In fiscal year 2019, North America accounted for just 5% of operating profit, but that figure has boomed.
Further international expansion is where the opportunity lies for Uniqlo, it seems, and the man behind the brand has recognised this and is making big global moves, as he seeks to eat further into Gap’s market share and become the world’s largest fashion retailer.
Just last month, India's Economic Times reported news that Fast Retailing is planning to expand its manufacturing presence in India through 20 'production partners' – with the aim to become the 'best-selling retailer in India'.
Executive shakeup as Uniqlo eyes global expansion
Such plans for world domination may well explain why, instead of retiring, the 74-year-billionaire owner Tadashi is making management changes at the top.
Tadashi Yanai, who is Japan’s richest billionaire, with US$36.9 billion current net worth, as per Forbes, will continue to lead the managerial decision-making and business expansion processes in his new position as the Executive Director, Chairman, and CEO of Uniqlo.
Daisuke Tsukagoshi, who held the position of Global CEO of the daily operations of Uniqlo and a board member of Uniqlo, has now been appointed Executive Director, President, and COO.
In a statement announcing the changes issued to the Hong Kong Stock Exchange, the company said it "sets high-level business targets and seeks to accelerate the growth in its global business in order to become the most-admired consumer brand worldwide".
Uniqlo is the largest of eight brands in the Fast Retailing Group – the others being GU, Theory, PLST (Plus T), Comptoir des Cotonniers, Princesse tam.tam, J Brand and Helmut Lang. Fast Retailing has a market cap of US$70.88 billion.
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