HONG KONG: Fast Retailing, the biggest clothing retailer in Asia, plans to operate 200 Uniqlo stores in mainland China and Hong Kong within five years, with the region set to overtake Japan as its largest sales generator by 2017.
About 80 percent of the stores will be in mainland China, the company's senior vice president, Tiger Pan Ning, said. Fast Retailing has five stores in Hong Kong and 10 in mainland China.
The casual clothing chain is tapping China as sales stall in its home market, which accounts for about 90 percent of total revenue. Fast Retailing's sales from China and Hong Kong will double every year to about 7 billion yuan, or $939 million, by 2012, Pan said.
"Sales growth in Japan is very limited as the population is shrinking," Pan, who is also the managing director of the Uniqlo Hong Kong unit, said Friday. "The group is shifting focus to Asia, especially to China, as the booming middle class is driving up spending."
The retail sales and economy in China have grown at more than 10 percent since March 2006, with the nation expected to overtake Germany this year as the third biggest economy in the world. Retail sales in Japan increased 0.5 percent in August and September from a year earlier.
Fast Retailing is following other retailers such as Wal-Mart Stores, Carrefour and Aeon of Japan in seeking to increase revenue by expanding in China.
Wal-Mart, the biggest retailer in the world, aims to more than double its 84 stores in China over the next five years. Carrefour, the largest in Europe, intends to add 25 outlets a year from a current total of about 100.
Aeon, the second-biggest retailer in Japan, plans to invest up to 15 billion yuan to establish 100 outlets in China by 2012.
Fast Retailing's chief executive officer, Tadashi Yanai, wants to double annual sales to ¥1 trillion, or $8.7 billion, by 2010 by expanding in his home market and overseas.
Founded in 1963, Fast Retailing operates 1,800 stores and owns clothing brands including Theory, Comptoir des Cotonniers and Princesse Tam.Tam. It plans to open outlets in Britain, France and South Korea over the next year.
Uniqlo stores in Hong Kong have a pretax profit margin of 25 percent, the highest within the group, according to Pan. He is targeting a profit margin of 15 percent in China, up from 7 percent now.
Fast Retailing lowered its planned second-half dividend last month to ¥60 a share from ¥70 because of a decline in profit. Sales in the year ended Aug. 31 rose 17 percent to ¥525 billion while domestic same-store Uniqlo sales gained 1.4 percent, less than half the 3.3 percent target.
