Uniqlo: Spectacular Openings in Moscow and Barcelona

The fashion distribution brand, belonging to Fast Retailg Group and known as the Japanese Zara, activates its online shop in Spain and opens new  stores in Moscow and Barcelona.

Abel Amón. 21/09/2017

The company published its good news: «We are pleased to announce that we will open our first store in Spain in September 2017. It will be located in Paseo de Gracia in Barcelona, ​​one of the most prestigious shopping streets in the city» explained on the web. The local, 1,700 square meters, is at number 18 of  this prestigious shopping street”. 

Uniqlo has large stores in New York, London or Shanghai, and it occupies spaces in the best stores of Japan. Now it is also in Spain which is an additional challenge for Inditex ,its largest competitor in our country and global leader in fashion distribution.

Previously, the Japanese company had launched its e-commerce page with a web domain dedicated to the Spanish market, while sales are managed through Uniqlo Europe, in the headquarters of the company in the Old Continent, based in Kingsway Street, London. It promotes its collections for men, women, children and accessories and offers free shipping for purchases of more than 40 euros, but only through a promotion code, indicating that it will not be forever. It also explains that it will allow free returns. In principle, the general shipping costs are 4.95 euros, and a premium fast delivery service.

Uniqlo Atrium opened in Moscow
And it did last Friday, September 8, through its flagship in Russia, specifically at the Atrium Mall after a large-scale reconstruction that lasted more than 4 months, as the brand’s press service in Russia reported.

Uniqlo Atrium began working in a unique format for Russia on the second and third floor of the commercial complex and occupied about 3000 square meters. There were podiums of presentation with presence of the models LifeWear concept, in addition, the technical equipment of the store changed: there were installed near 100 video monitors, including 2 large walls of video and screens in the columns. The commercial space has a separate area in association with the Museum of Modern Art «Garage», where it is possible to find books and magazines about art, fashion and modern culture. In addition, it is here that will be held free lectures and master classes and “Garage” special projects.

Significant changes have affected the exterior of the store. In the outer windows, rotating mannequins were installed, representing the key models of current season. The day before the grand opening in Moscow, a large «City Discovery» party was held that brought together the followers of the Japanese brand and the brand’s star ambassadors in Russia.

Results of Fast Retailing in the first Quarter Fiscal 2017 1T-3T. The company divides its business lines into Uniqlo Japan, Uniqlo International and global brands.

Uniqlo Japan reported an increase in revenue, but a contraction in profit in the nine months to May 2017. Revenue rose 1.2% year-on-year to ¥ 653.4 billion (EUR 5.2 billion) however, its operating profit fell one 0.6% year-on-year to ¥ 92.6 billion. (EUR 695  million).

In the three months from March to May, same store sales, including online sales, rose 2.7% year-on-year thanks to strong sales of new items such as wireless bras, easy ankle pants and Dry Stretch trousers Kando sales during Golden Week, Mother’s Day and Uniqlo anniversary celebration. Meanwhile, e-commerce sales increased 17.3% in the third quarter to constitute 6.2% of total sales. Operating profit declined in the third quarter, but this was due to factors such as the effect of weaker yen exchange rate and increases on cost of sales, as well as higher distribution, personnel and other business expenses.

Uniqlo International: Profit increased strongly in Southeast Asia, South Korea and China. The branch generated, both, revenue increases as well as profit in the nine months to May 2017, with a 5.4% year-on-year growth, reaching 561.5 billion yen (EUR 4.2 billion) and an increase in operating profit of 61.3% yens to 68.1 billion yen (EUR 509 million). Profits continued to expand in Uniqlo Greater China thanks to successful sales campaigns scheduled to attract customers during the first day of May and other holidays, and strong sales of UT t-shirts, polos and other summer ranges. Uniqlo USA reported lower operating loss in the third quarter, after same store sales rebounded and business cost ratios improved under the new operating structure. In Europe, leading investment in 10 new store openings for three months led to increased costs, which slightly reduced operating profits. Uniqlo International network increased by 143 to 1,071 stores by the end of  May 2017.

Global Brands: The benefit of line Theory rose drastically, but the benefit of GU trade mark ,  is reduced In the nine months to May 2017 to 260.9 billion yen, while operating income fell 17.0% year-on-year to 19.1 billion yen. GU’s revenues rose, but profits and stores declined during the three months from March to May 2017.

Consolidated estimates for fiscal year 2017
Retailing growth of the company is expected to generate a large expansion in profits year-on-year through August 2017. In detail, consolidated revenues are forecast to rise to ¥ 1.85 trillion – EUR 13,260 billion-  (+ 3.6% year-on-year)  and profit attributable to owners of the parent company to ¥ 100.0 billion –EUR 750 million-  (+ 108.1%). This would translate into expected net earnings per share of ¥ 980.74. In the nine months to May 2017, the profit attributable to the owners of the parent already reached ¥ 120.1 billion, a level well above our full year target of ¥ 100.0bln. However, the company is cautious about further increases in profits, after considering several factors such as potential loss-making subsidiaries and store-related impairment losses, and unpredictable exchange rate trends.

New stores and Dividend Figures
In terms of number of stores, we expect the global Fast Retailing Group network to expand to a total of 3304 stores by the end of August 2017. This total is broken down into 841 Uniqlo Japan stores (including franchises), 1,088 Uniqlo International stores and 1,375 global brand stores. Finally, we have scheduled an annual dividend for fiscal year 2017 of ¥ 350 (EUR 2.60) , evenly divided into an interim dividend of ¥ 175 and an end-of-year dividend of ¥ 175 yen per share.

Disclosure: The Luxonomist is not responsible for the views expressed in the article. The text has been written freely expressing their own ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.

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