UNIQLO Will Give Up The "American Dream"

Uniqlo

The same store sales in the Japanese market recorded a 1.1% decrease in March.

The Fast Retailing Co. Ltd. 9983.T group, the largest clothing retailer in Asia, explained the nationwide cool weather during the interpretation period, hitting the sales of new spring products.

During the period of March, the number of customers in Japan's 740 stores in Japan, which had been operating for the past year, increased by 6.6% over the same period last year, but it was offset by a 7.2% decline in the unit price of Uniqlo.

From the fiscal year of September 1, 2016 to March 31, 2017, the sales of the same store in Uniqlo, Japan, and UNIQLO could only be equal to the same period of the previous year. The decline in the price of 0.8% per passenger was just offset by a slight increase in the number of customers 0.8%.

While growth in the local market stagnates, Uniqlo uniqo is also likely to face problems in the US market, which has been developing behind schedule.

Ryui Masa, the founder, chairman, President and chief executive of Fast Retailing Co. Ltd. group, recently interviewed in the US, said that if the new US president, Donald Trump Trump, levying tariffs on "made in the United States" and local employment, she would consider the withdrawal of Uniqlo and UNIQLO from the US market.

According to Trump's Border Adjustment Tax (BAT), all imported consumer goods will be heavily taxed, while export goods will enjoy tax concessions, and the corporate tax rate will also fall sharply by 15 percentage points to 20%. This move is considered and is mainly aimed at Trump claiming to have stolen the US position.

Representing Gap Inc. (NSYE:GPS) Cape group, Target Corp. (NYSE:TGT) Taghit department store and J.C. Penney Co. Inc. NYSE:JCP (NYSE:JCP)

Retailers such as Retail Industry Leaders Association (RILA), the US retail Leaders Association, have clearly opposed the tax and have met with Trump to discuss the matter.

Ryui Masa, Tadashi Yanai, last week in New York Uniqlo's 2017 day autumn and winter new product launch campaign said that if asked directly to produce in the United States, the brand would "quit the United States" because they could not make good quality products in the United States at low cost to consumers, and business in the United States would be meaningless.

He was the first non US retailer leader to speak for BAT.

RILA President Sandy Kennedy also pointed out that BAT is untested and harmful. It will put us retail jobs in a dangerous position and force consumers to pay up to 20% of the premium for household necessities.

Target Corp. CEO Brian Cornell of Taghit department makes it clear that American consumers will pay the price.

Another large department store group, Kohl 's Corp. (NYSE:KSS) Kevin Mansell, also pointed out that one thing that can be determined is that the price has risen sharply, and all precedents have only one end - demand has been weakened.

But Ryui Masa's exact term "direct demand for production in the United States" and border taxes are obviously different concepts.

As of the end of March, Uniqlo's UNIQLO store has 47 stores in the United States and plans to expand at 20-30 new stores a year ago. Liu has set a target of 200 stores for the market.

In fact, the brand has entered the United States in 2006, but it has not been able to introduce enough passenger flow and sustained business losses because of its low brand awareness, inadequate advertising and inadequate display of commodities. Last year, it closed 5 stores in the rural market.

In an interview with Bloomberg in the first month of the month, Tadashi Yanai, Liu Hao, said that the actual number declined due to the adjustment of US stores.

In the past 1.5 fiscal year, the number of stores in the US market has increased by only 5.

According to the world clothing and shoe net, the first quarter of 2017 fiscal year, the Uniqlo business lost its US business losses. In the 2016 fiscal year, the Group recorded a one-time loss of 7 billion 400 million yen, which was related to the impairment loss of stores and the closure of stores.

When asked about the time when American Uniqlo UNIQLO UNIQLO was able to make profits, Ryui Masa did not respond positively. Instead, he set out an example of H&M, which once lost 100 billion yen (US $900 million) in the United States.

Since then, the focus of American expansion is still to open large stores in the northeast and West Bank cities, and the strategy of layout of the rural shopping centres has been completely abandoned.

Ryui Mana is the "most important market for us" and expansion is still dominated by Asia, because it is the "engine of growth of the world".

However, there are few analysts in the industry who are optimistic about the Uniqlo outlook of the United States. Tang Xiaotang, founder of fashion retailing industry research and consulting organization No Agency, last week commented on Uniqlo Uniqlo UNIQLO. The loss expansion of the brand in the United States has been built on the basis of increasing profits in the Chinese market. However, due to the wrong strategy, the profits of the Fast Retailing Co. Ltd. fast marketing group in the last fiscal year and the Chinese market have declined. The group's first quarter financial report shows that profits have risen, but the sales of China's leading international market is weak. The first quarter of fiscal year 2017 recorded a 0.2% decline.

If earnings growth in other international markets can not offset losses in the US market, even if there are no border taxes and manufacturing problems in the United States, Uniqlo's UNIQLO may actually opt out of the US market.

In fact, industry analysts already wanted Ryui Masa to stop making "the American Dream".

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Uniqlo UNIQLO, the first American shop in SoHo District, New York, was reopened after refurbishing in 2016.

The stagnation of Japan, the difficult steps of the United States, and the slowdown in China's most important overseas markets forced Ryui Masa to abandon the target of 5 trillion yen in 2020's Fast Retailing Co. Ltd. sales last year. The target now is 3 trillion yen, while the current 2017 fiscal year's pre paid income is 185 million yen.

Ryui Masa said last week: "with the help of digital technology, I firmly believe that 3 trillion yen can be achieved". In early March, when he unveiled the new headquarters of Uniqlo Fast, UNIQLO, he came out with the belief that "digital technology will change the world", hoping to pform Fast Retailing Co. Ltd. fast marketing group from a pure clothing retailer to a "digital consumer retail companies".

Ryui Masa's specific vision is that, through artificial intelligence and big data, the physical store stores the supply according to the needs of its region, which is completely contrary to the traditional chain store. At the same time, consumers can understand the supply chain and inventory of Uniqlo UNIQLO UNIQLO, so that consumers can buy clothes made for them and make the "U" of Uniqlo realize its significance. Ryui Masa said this is the "answer" to change the world.

To achieve this level, supply chain, computer system and store network must be equipped with suitable systems. Liu well is saying that all the necessary components can be put into place in a year.

For the so-called "digital consumer retail companies" strategy, industry analysts believe that it is actually a euphemistic wording of Uniqlo UNIQLO's learning from Zara.

Ryui Masa also ruled out the goal of reaching 3 trillion yen through mergers and acquisitions.

Fast Retailing Co. Ltd. (9983.T) 5 reported 34620 yen on Wednesday, down 0.06% on the whole day, and the stock has fallen by 17.2% since 2017.

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