Gap lost $49m on sales in the second quarter, down 8% from a year earlier, compared with a profit of $258m a year earlier. States-based retailers from Gap to Kohl's have warned that their profit margins are slipping as consumers worried about inflation put off buying clothing.
But Uniqlo said it was on track to make its first annual profit in North America after 17 years of trying, thanks to changes in logistics and pricing strategies introduced during the pandemic and a virtual end to discount promotions.
Uniqlo currently has 59 stores in North America, 43 in the United States and 16 in Canada. The company did not provide specific earnings guidance. Overall operating profit from its more than 3,500 stores worldwide will come in at Y290bn last year.
But in ageing Japan, Uniqlo's customer base is declining. Uniqlo is using the outbreak as an opportunity to make a "radical change" and a fresh start in North America. Crucially, Uniqlo has stopped almost all discounting, essentially getting customers used to uniform pricing. Instead, the company has refocused on basic clothing items such as casual wear and streamlined inventory management, setting up an automated warehousing system to link inventory from physical and online stores.
As of May 2022, the number of Uniqlo stores in the mainland exceeded 888. In the first half of the fiscal year ended Feb. 28, Fast Retailing Group sales rose 1.3 percent from a year earlier to 1.22 trillion yen, operating profit jumped 12.7 percent to 189.27 billion yen, and net profit jumped 41.3 percent to 154.82 billion yuan. Uniqlo's Japanese sales revenue fell 10.2 percent to 442.5 billion yen, operating profit fell 17.3 percent to 80.9 billion yen, Uniqlo's international sales revenue rose 13.7 percent to 593.2 billion yen, operating profit also rose 49.7 percent to 100.3 billion yen, 55 percent contributed by the Chinese market. During the period, Uniqlo added a net 35 stores worldwide, 31 of which were in China.
Despite repeated disruptions to warehouses and distribution in Shanghai, affecting 15 per cent of its stores and a 33 per cent year-on-year drop in Tmall sales in April, Uniqlo said there had been no change in the brand's determination to continue betting on China. Wu Pinhui, Uniqlo's chief marketing officer for Greater China, said in an interview in early March that Uniqlo would maintain a pace of 80 to 100 stores a year in China, all of them directly owned.
Post time: Jun-03-2019