Uniqlo shines amid U.S. retail gloom after pandemic-triggered revamp

Photo from: The Japan Times

By The Japan Times

Just as inflation ravages the big guns of U.S. apparel retail — awash in high inventory, and deep discounts to lure shoppers back to stores — Japan’s Uniqlo is set for its best year ever in North America, after a pandemic-imposed revolution in its business model.

Retailers from Gap to Kohl’s are warning of slumping profit margins as inflation-wary customers hold off on buying clothing. But the flagship brand of Fast Retailing said it’s poised to book its first annual profit in North America — after 17 years of trying — aided by a revamp of its logistics and pricing strategy, introduced during the pandemic, and essentially halting discounting.

Fast Retailing didn’t say how much it will make from its 59 Uniqlo stores in the region, 43 of which are in the United States with 16 in Canada. The number will be small compared with the ¥290 billion ($2.1 billion) analysts polled by Refinitiv expect it to book in overall operating profit for the 12 months ended August from more than 3,500 group stores around the world.

But its customer base is declining in graying Japan, and concerns are increasing about how much it can rely on China as a growth engine. Analysts say that whether Fast Retailing can sustain progress in North America will be a key gauge of how close it can get to its lofty goal of overtaking Spain’s Inditex as the world’s leading apparel retailer, set by founder and chief executive Tadashi Yanai.

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