Fast Retailing US, the North American business unit of Japan’s largest apparel retailer is to slow its Uniqlo store roll out program after heavy losses.
The Japanese company missed its earnings target in the latest quarter and posted losses due to a US$134 million impairment charge relating to its 42-strong US Uniqlo store network and the poor performance of other brands there, including the J Brand denim label.
Last year, Uniqlo opened 15 new stores in the US market – this year it will open just five.
But the company remains committed to the US market – last week it was announced it had signed a lease to take an anchor tenancy in a downtown Denver shopping mall.
The Financial Times quoted CEO Tadashi Yanai: “The brand penetration in big cities such as New York, San Francisco and Chicago – where we will open a new store – is good, but not in the suburbs.
“We need to overhaul our policy for opening new stores.”
CFO Takeshi Okazaki admitted in an earnings briefing: “The brand also still doesn’t have a lot of recognition in the United States.”
Yanai will relocate a management team to the US to review operations there and try to revive sales growth, with a fresh strategy to be developed. In the year to the end of August, Fast Retailing reported a 48 per cent growth in net profit to JPY110 billion, (US$914,685,200) 10 billion lower than its earnings guidance three months earlier. It also incurred losses on the refurbishment of its Oxford St, London, and Shanghai flagships.
Annual sales rose 22 per cent to JPY1.68 trillion (US$13.9 billion) largely due to growing demand for its products in China and South Korea.