Enterprises Have A Life Span: UNIQLO Falls

"An enterprise has a life-span. If it can't change itself with the change of the environment, then the enterprise can't survive well." "as an operator, no matter how the environment changes, it's the most basic responsibility to continuously improve business performance."

This is Liu Jing's own book, "one win nine losses: the secret of UNIQLO's global hot selling". I don't know if these two words appear in his mind now.

First of all, I would like to introduce Mr. Yanai: he was born on February 7, 1949, and is now the chairman, chairman, President and CEO of Fast Retailing in Japan. UNIQLO is the most famous brand of Fast Retailing, and 80% of the group's annual * * comes from UNIQLO.

Let's put the time back to September 14. Mr. Yanai (35.5 billion) has just shed Japan's richest man's aura, according to the index. Surpassing him is Takeo sakazaki (US $38.2 billion), the founder of automation firm Keith, whose share price almost doubled from the beginning of last year.

In the 2021 Forbes rich list released in April this year, Liujing ranked second with $42 billion, which was overtaken by sun Zhengyi of US $44.4 billion, and failed to hold the top position for two years.

At that time, Takeo sakazaki ranked third, with $25.8 billion.

At that time, Liu Jingzheng, though not the first, was also proud. After all, in February, the market value of FMCG exceeded 10 trillion yen at one time, and * * overtook INDITEX group, Zara's parent company, to become the top of the global total market value of the clothing industry.

However, it was only half a year.

Cotton dispute in Xinjiang

Fast Retailing lowers the annual forecast

On March 24, 2021, H & m officially declared that it would not cooperate with any garment manufacturing factories in Xinjiang, nor purchase products or raw materials from the region.

At that time, some companies such as Nike and Adi chose to follow BCI. Data show that Adidas sales in April fell 78% year-on-year, while Nike's sales in April fell 59% year-on-year. Originally, Nike ADI, which had dominated the domestic high-end shoe market, gave up the market and was divided up by the domestic brands that came from behind. Subsequently, UNIQLO was also exposed. In August last year, its parent company, fast retailing, issued a press release on its official website, saying that no UNIQLO products were produced in Xinjiang, and no production partners of UNIQLO were contracted to fabric factories or spinning factories in Xinjiang.

But Liu Jing, 72, is not stupid. Knowing that mainland consumers, as the main market, can't afford to offend them, he quickly issued a statement: "we are monitoring all factories and cotton production, and once we find problems, we will stop cooperating with each other. Besides, it is not so much a human rights issue as a political issue."

"Human rights are a very important thing. As a business, we are doing what we can and we don't comment on other things."

As soon as his words were said, many people in China didn't buy it. "Businessmen" and "double dealers" have different opinions.

The market reaction is also reflected in the third quarter (2021.3.1-2021.5.31) financial report of FMCG.

In terms of regions, mainland China's market recorded a significant increase in both * and profit margins.

But!

In addition, during the single quarter of the third quarter of last year, during the May 1 Labor Day promotion activities in mainland China, retaliatory consumption occurred due to the control of the covid-19 epidemic situation, and the sales situation was particularly strong;

However, in the same period of this year, due to the shift of consumption direction to domestic travel, the overall demand of the retail market showed a downward trend, resulting in the performance of Greater China region in the third quarter during the single quarter did not meet the original expectations.

Good guy gives people a round the corner. Frankly speaking, it is because of the "Xinjiang cotton" incident that the performance of May fell, which led to the overall third quarter performance falling short of the expected (although the whole quarter still increased). Of course, we still have to look at the fourth quarter financial report or annual report of fast retailing group to find out the specific impact and how long it will last.

But not all things in the world can be like the "Xinjiang cotton" incident, endure for a while, can pass quickly - such as virus.

If we say that "Xinjiang cotton" is a heavy blow to the Greater China market which fast sale attaches great importance to, it makes fast sale a little dizzy and can't see the direction clearly.

The repeated epidemic in Japan was a blow to the giant's jaw. It was a direct run to Ko.

Although both the number of infections and the number of deaths in Japan are declining month by month, Delta and the ramda virus strain just emerged last month still cast a shadow over the epidemic control.

With this year's epidemic, the stock price of fast selling has been falling. As of Monday (13th), fast selling's share price is down 18% this year.

Due to weak summer sales in Japan and the government's strict epidemic control measures, Fast Retailing lowered its business forecast for the whole year in July.

Now, UNIQLO has begun to close stores to reduce spending, and the financial report said "it will assume that the impact of the epidemic will continue until the end of February 2022.". The fourth quarter of this year's financial report, I am afraid, is still difficult to maintain decent.

Limited by the epidemic situation, struggling to survive

Competitors recover first

Although the parent company of H & M, which was at the core of the "Xinjiang cotton" incident, lost its Chinese market, its other markets around the world have begun to recover.

On September 15, H & M released its performance report for the third quarter of fiscal year 2021 (2021.6.1-2021.8.31), which revealed that sales increased by 14% year-on-year to SEK 55585 billion, down 11% compared with the same period in 2019 before the outbreak.

It is understood that the company's sales outside Asia and Oceania (in local currency terms) have returned to pre epidemic levels.

In this regard, it was achieved when there were about 100 stores of H & M that had not been opened.

Let's take another look at the first quarter results of INDITEX, Zara's parent company, in June.

In the three months to the end of April, the company's sales volume was 4.942 billion euro, up 50% year-on-year;

Its business volume reached 1.235 billion euro, a year-on-year increase of 2.5 times;

Net * * was 423 million euros, compared with a net loss of 409 million euros in the same period last year.

However, in the first quarter of this year, we have seen that the epidemic situation has been effectively controlled and the market will gradually start to recover. Therefore, INDITEX group is expected to return to its operating revenue before the outbreak of the epidemic by the end of this year.

Competitors have gradually begun to get rid of the quagmire, and Liujing and fast sale are still struggling under the double blow of the local epidemic and the heavy damage to emerging markets.

External: fierce competition

Internal: the high-level people are in turmoil, and the successors are leaving

While the external environment is getting worse, the giant's interior seems to be constantly hollowed out.

In May this year, everlane, one of UNIQLO's competitors, issued a statement saying that Shu hung, the former Global Executive Creative Director of UNIQLO, will be the global creative director of everlane, responsible for supervising the creative team of the brand, including advertising creativity and brand image.

Then, last month, Nippon, the parent company of Muji, announced that Tanaka, 52, would be promoted to President on September 1, taking full responsibility for managing the daily affairs of the group and formulating development strategic plans.

In 1998, he worked in the fast retailing group, the parent company of UNIQLO, and then served as CFO of express sales and general manager of business in Europe and America of UNIQLO. He was once considered to be the successor of president and President of Fast Retailing, Liu Jingzheng.

It is not enough to poach people away. According to the liangpin project, the group will launch a bolder medium-term business plan with the core of expanding its business in China under the leadership of Xuanfu.

Is this a precursor to the collapse of the building? I don't know.

The external environment is treacherous, and the market is always full of reincarnation and rebirth.

As Liu Jingzheng said:

"An enterprise has a life-span. If it can't change itself with the change of the environment, then the enterprise can't survive well. As an operator, no matter how the environment changes, it's the most basic responsibility to continuously improve business performance."

This time, can Liujing and his UNIQLO succeed in changing?