Í Uniqlo Faces Tough Climb to Conquer Suburban US

Retail. Growth push í Uniqlo faces tough climb to conquer suburban US lossmaking. While the company does the world's largest retail chain warned suburban malls, with mixed success. Japanese billionaire's foray not disclose US revenue, Mr Yanai has that earnings would fall in the 2017 fis• Mr Yanai has publicly expressed into world's biggest clothing said he wants it to reach YlOObn in three cal year. interest in acquisitions to strengthen years. Sales in China, Hong Kong and Rival Japanese retailers are also facing Fast Retailing's overseas profile. But its market is dogged by losses Taiwan have already topped Y300bn. hurdles in replicating their successes in attempt to gain a partner in the US Having aggressively pursued a global Asia in western markets. Ryohin unravelled following a failed $900m bid expansion plan, a humbled Mr Yanai Keikaku, which operates Muji stores, to buy Barneys New York in 2007. KANA INAGAKI - TOKYO said the retailer would be more selective logged an operating loss of Y482m in It has since carried out smaller acqui• When Tadashi Yanai, the Japanese bil• about choosing store locations. In the Europe and the US during the March to sitions, taking full control of Theory in lionaire who founded Fast Retailing, year ahead, it plans to open only five August period while profits in East Asia 2009 and buying J Brand, a US denim opened a flagship Uniqlo store on New Uniqlo stores in the US compared with grew 95 per cent year on year to Y7.8bn. wear label, in 2012. There was much York's Fifth Avenue in 2011, he said it 17 for the 2014-15 fiscal year. However European groups that spe• talk last year that Fast Retailing was was "the happiest day'' of his life. "We're going to bring together and cialise in fast fashion, most notably Zara interested in US chain J Crew but a bid He believed then that the chain's dispatch to the US our elites worldwide and H&M, have thrived in the current did not materialise. arrival at that prime US shopping desti• to rebuild our management," he said. climate where US consumer spending is Even without success in the US, most nation took it a big step closer towards Fast Retailing is not alone in its diffi• constrained. US retail sales grew a dis• investors expect that booming sales in overtaking its larger global rivals, Indi- culties in the world's biggest clothing appointing 1 per cent in September. Asia will keep Fast Retailing's growth tex of Spain, the parent of Zara, and market. Earlier this month, American Uniqlo's efforts to crack the US mar• story intact. Sweden's H&M. Apparel, the US retail chain that won ket date back to 2005 when it opened Annual revenue reached an all-time But a decade after Fast Retailing's first fame with its "Made in America" tag, stores in three malls in New Jersey. high of Y1.68tn, propelled by a 46 per foray into the US market in 2005, Mr filed for bankruptcy protection. Other A year later, it shut the stores and cent rise in sales in China, Hong Kong Yanai's dream of becoming the world's teen retailers such as Abercrombie & instead opened a lavish flagship store in and Taiwan which offset its US setback. top brand remains just that. Fitch and Aéropostale have also strug• Soho, New York, shifting its focus to big Same-store sales rose 6.2 per cent year- The owner of the Uniqlo casual cloth• gled. Shares in Walmart and other US cities. In the years since, the company on-year at Uniqlo stores in Japan, ing chain has lost $5bn in market capi• retail chains fell hard yesterday after has once again tried opening stores in although that growth rate is expected to talisation — a drop of more than 12 per slow to 4 per cent in the year ahead. The cent — since it shocked investors last company does not give same-store sales week with a rare miss in its annual profit Uniqlo store numbers Fast Retailing revenues** figures for overseas outlets. targets. FY 2015 ¥tn Fast Retailing, which operates more Executives blamed the expanding than 1,600 Uniqlo stores worldwide, losses at its US operations on the brand's expects the number of overseas stores low recognition in suburban America to top the number of domestic outlets in and on weak management. the current financial year. But analysts say the problems in the Still, both company executives and US run deeper. "They need to redo analysts admit the US business is pivotal everything from products, branding, to Fast Retailing's aspiration to become ecommerce to management," says Sho a top global player — and potentially the Kawano, an analyst at Goldman Sachs. only market left that could become a "There is a mountain of challenges new growth driver for Uniqlo. ahead." "It's impossible without the US," says Mr Kawano estimates US losses tal• Takahiro Kazahaya, a Deutsche analyst. lied more than YlObn ($84m) for the "It should continue with the challenge fiscal year that ended in August, and * UK, France, Russia and Germany ** International Financial Reporting Standards CIFRS) and the company has earned the right to anticipates the US business will remain Source: Fast Retailing continue since it makes money." .

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