Having closed stores earlier this year, Uniqlo planning to leverage off China’s retail recovery and rising trend in domestic travel targeting new store locations
Uniqlo is set to open 20 new stores in China from September to October this year, including its first location in Sanya. This move follows, parent company, Fast Retailing’s earlier announcement in March that it would close up to 50 “unprofitable” stores in China. Uniqlo currently operates over 900 directly managed stores across mainland China and aims to open 50 new stores annually in the country, resulting in a net increase of 30 stores.
In July, Chinese retail sales grew by 2.7% year-over-year, an improvement from June’s 2% increase and slightly above analysts’ expectations. While some sectors, such as domestic tourism, are recovering, the unemployment rate rose to 5.2% in July from 5% in June. This rate reflects only urban areas, and the youth unemployment rate was 13.2% in June, with July’s figures pending.
On August 16, Uniqlo hosted its 2024 Fall/Winter product launch in Shanghai. The new collection, themed “Timeless Tones,” draws inspiration from Edinburgh’s eclectic charm and the modern color aesthetics of Stockholm.
At the event, Uniqlo also reaffirmed its commitment to the Chinese market, focusing on enhancing its store management strategy. Recently, the brand received praise on Chinese social media for its high-quality, moisture-wicking table tennis uniforms designed for the Swedish Olympic team, contrasting with the “sweaty-looking” outfits of Chinese players clad in apparel from local brand Li-Ning.
Fast Retailing reported a net profit of 116.9 billion yen ($720 million) for the first quarter of this year, a 37.4% increase from the previous year, driven primarily by recovering sales in Japan. The company has raised its full-year net profit forecast to 365 billion yen for the fiscal year ending in August, up from 320 billion yen.
For the third quarter, Fast Retailing’s sales reached 767 billion yen, a 13.5% increase year-over-year. International sales amounted to 408 billion yen, up 19.4%, fueled by growth in Europe and North America. However, the company experienced a significant profit decline in mainland China and Hong Kong, largely due to sluggish consumer spending amid a weakening economy.
As of February, Uniqlo operated 1,028 stores in Greater China, with 922 in mainland China. Pan Ning, CEO of Uniqlo Greater China, affirmed that the company has no plans to reduce its current presence. Uniqlo aims to expand to 3,000 stores and achieve sales of 3 trillion yen in the region, although no timeline was specified. Additionally, Uniqlo plans to boost its e-commerce presence in China, targeting online sales to account for 30% of total sales, up from the current 25%.
Main Image: (Supplied UNIQLO)
