Emboldened by domestic growth defying the lingering recession, Fast Retailing Co., operator of inexpensive casual clothing chain Uniqlo, announced Wednesday an ambitious goal of boosting worldwide sales more than sevenfold by 2020 to 5 trillion yen.
The business plan calls for increasing its number of shops around the world to 4,000 outlets from the current 846, and aiming for a pretax profit of 1 trillion yen.
Of the total consolidated sales target of 5 trillion yen, between 3 trillion yen and 4 trillion yen is expected to be generated through overseas operations, more than 80 times the current scale of sales. The figure dwarfs the domestic market target of 1 trillion yen in consolidated sales by 2020.
The overseas target also overshadows the actual sales figures of casual wear retail giant Gap Inc., Spanish retailer chain Zara, and H&M of Sweden, all of whose annual sales figures range from around 1.3 trillion yen to 1.4 trillion yen.
Behind the aggressive targets lies a strong sense of confidence. Tadashi Yanai, chief executive of Fast Retailing, has stressed that customers have flocked to Uniqlo stores not simply seeking low prices, but for the quality of its clothes.
To satisfy Japanese customers, Fast Retailing has made a point of improving product quality by sending experts to Uniqlo's production bases in China. The company has also taken a fastidious approach to improving efficiency, shaving every possible second from the waiting time for adjusting hemlines.
Such fervent efforts appear to have paid off, as other retailers have been suffering amidst sagging personal consumption.
According to internal affairs ministry statistics, the average household spent 11,175 yen a month for clothing last year, down about 20 percent from the monthly expenditure of 14,245 yen in 2000.
Apparel sales have been slumping at department stores and supermarkets, particularly after the global downturn hit last fall. But Fast Retailing has seen its profits grow over the last few years and as other retailers suffer, the company has emerged a winner
Despite the company's impressive performance, the 5-trillion-yen target may prove difficult to reach. Fast Retailing declared in 2005 that it would achieve sales of 1 trillion yen by the year ending August 2010. At present, sales are expected to remain at around 800 billion yen.
Most of Fast Retailing's profits are currently generated in the domestic market.
"Profits are improving in China and South Korea, and if we put in an extra effort, then I'm sure that we can achieve the goal. If we can't, then there is no way we can survive in Japan either," Yanai told reporters.
The company is preparing to open its first outlet in Moscow next spring and plans to increase the number of stores in China at a pace of 100 outlets each year. While increasing its presence in the Southeast Asia region, Fast Retailing is also planning to focus on urban centers in Europe and North America.
Another key pillar of the growth strategy is a new human resources training program which the company plans to start next year with input from Harvard Business School and Hitotsubashi University.
By creating "a new type of business school," Fast Retailing hopes to groom 200 candidates for top management posts in Japan and abroad over a period of five years, company officials said.
