Those are the magic numbers in terms of revenue and units for Fast Retailing Co. Ltd., parent of Uniqlo. Chief executive officer Tadashi Yanai said the firm remains on target to achieve them by 2020 — which would make it the largest apparel retailer on Earth. It was a goal he set for the Japanese fast-fashion firm in 2009.
On the eve of unveiling the biggest Uniqlo flagship in the world, an 89,000-square-foot unit on Fifth Avenue and 53rd Street here, Yanai said, “By 2020, we’ll have 4,000 [Uniqlo] stores worldwide.” Asked if he was aware of other retailers with as many stores, Yanai said, “In Japan, there are 10,000 convenience stores, but I don’t think any apparel retailer has that many stores.”
There’s more than enough global demand for Uniqlo products, Yanai insisted. “China and India will become the center of growth with a population of at least 3 billion,” he said. “That’s more than half of the world’s population. All of those people will start to become middle class.”
There are 149 Uniqlo stores in China. Yanai wants 1,000 in operation there by 2020. Doing meaningful business in India is still several years away for foreigners. In the meantime, Uniqlo is opening stores in Southeast Asia. After unveiling two units in Singapore and a second location in Malaysia, Uniqlo last month opened its largest store in the region, a 9,000-square-foot unit in Bangkok. A few years ago, the income disparity between Thailand and Japan would have made opening a Uniqlo store there “unthinkable,” Yanai said. “Now, Asia is going to become developed and industrialized. Shanghai, Beijing, Hong Kong, Taipai, Jakarta, Manila, Kuala Lampur and Ho Chi Minh City. In the next 10 years, they will all come of age,” he said.
Yanai envisions Uniqlo stores throughout Asia as well as dotting other markets. “This year we’re able to open a large number of stores — 150 — overseas,” Yanai said. “Next year and the year after, we hope to open 200 to 300 stores. We want as many as possible to be large-scale stores.”
The ceo said he hasn’t decided on the exact number of stores for the U.S. “We want to make the Fifth Avenue flagship a success and then open about five other stores in Manhattan and about 15 in the suburbs. New York is a very good market and I think there are other good markets in other cities. We’ll go to Chicago, San Francisco and Los Angeles.”
Uniqlo’s second-largest store in the world, a 64,000-square-foot unit, will bow on Oct. 21 at 31 West 34th Street in Manhattan, between Fifth and Sixth Avenues.
Such stores come at no insignificant cost. Uniqlo signed a lease to pay $300 million over 15 years, or $2,000 a square foot, to rent the Fifth Avenue space, which remains the richest lease in Manhattan’s history. According to real estate and construction sources, the flagship cost between $20 million and $25 million to build. The company declined to comment. With a length of 297 feet — more than three-quarters the size of a football field — the flagship has oak floors staircases that glow with LED lights. Glass boxes house featured products, 300 LED screens and 300 ultramodern mannequins designed for Uniqlo are distributed throughout. Rotating mannequins spin in the first- and second-floor windows along 53rd Street, and are perched alongside the escalator. A massive escalator goes straight to the third floor, but doesn’t come down.
If Yanai betrayed any apprehension, it was over the Fifth Avenue flagship’s opening today. “I’m afraid it will be raining in the morning,” he said, adding that he hopes the weather won’t deter people from lining up outside the building.
Uniqlo’s partnership with Jil Sander, who designed the +J collection, has ended. The last delivery will be on Nov. 2. “What we did with Jil Sander, we probably cannot do with another designer because we think she is the best designer in the world. If we could find someone that matches us, but maybe comes from a little different world…,” he said, his voice trailing off. If he had anyone in mind, he wasn’t saying.
While Yanai has been bullish on Uniqlo’s high-quality basics, he said some of the more fashion-forward elements of creative director Naoki Takizawa’s new Innovation Project could find their way into more of the standard Uniqlo fare. Takizawa, who worked for Issey Mikaye and Helmut Lang, “will bring more style to the Uniqlo line and also bring something the customer wants and longs for,” said Yanai.
Pieces made from Uniqlo’s high-tech fabrics, such as Heattech and Drylux, are expected to be big sellers. Shin Odake, ceo of Uniqlo U.S., said the retailer is planning to sell 100 million pieces of Heattech items worldwide this year. Yanai cited Uniqlo’s Silky Dry men’s underwear. “I’m wearing it right now,” he confided. “It feels like you’re not wearing anything. The original idea was for it to be worn in the spring and summer, but I wear it year-round.”
Yanai’s efforts to grow Fast Retailing could be accelerated by acquisitions. Fast Retailing in 1997 bid $900 million for financially troubled Barneys New York Inc. before losing out to Dubai-based Istithmar. Yanai was not displeased with the outcome in 2009, when he said in an interview, “We are so happy that we could not buy Barneys. If we owned Barneys right now, we would be building their business and we would be spending a lot of effort on that.” On Thursday, he sounded a different tune. “If there is an opportunity I’d like to buy some company in the fashion industry,” he said. “If Barneys or Bergdorf’s wanted to work with us and we felt synergies with them, we might buy them. We’d have to feel the synergies. It’s like a marriage.”
Yanai said there’s still significant potential to expand Fast’s previous acquisitions, Comptoir de Cotonnier and Link Theory. The latter’s business will be developed in Europe and China. “We hope to open a lot of stores for Theory,” Yanai said, adding that the company plans to bring European brands such as Comptoir to Asia, “where there is more opportunity and there’s also more opportunity in the U.S.”
Fast Retailing on Wednesday reported full-year financial results, including a 12 percent decline in net profits for the 12 months ended Aug. 31, but the company said it expects to post double-digit profit and sales growth for its current fiscal year, ending Aug. 31. The retailer blamed the weather as well as a poor selection of products. On Thursday, Yanai said stores offered too many different products, yet were out of stock on core items. “Rather than have a wide array of products, it’s more important to have the right products,” he said. “Any business has its ups and downs. We think we can grow in Japan.”
For now, though, Yanai’s mind is on the U.S. “I want to make sure that [Americans] are very happy to have Uniqlo in the U.S.,” he said.
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