TOKYO — Tadashi Yanai wants Fast Retailing Co. Ltd. to get faster and better.
The founder, chairman, president and chief executive officer of the parent company of Uniqlo, Theory and Helmut Lang said Thursday he plans to overhaul the company’s cost structure while returning it to its position as a fashion and price leader.
“If we think in terms of the needs of customers in this age, price, quality and how fashionable something is are all things that must be supported,” Yanai said. “So rather than just cutting prices, I want to return to prices [that make products] easy for customers to buy.”
In order to offer the best prices for customers at any time — not just during weekend sales — Yanai said the company will be rethinking its product development and lead times.
A key part of this will be the Internet, and Yanai said in the near future he wants e-commerce to represent 30 percent of global sales.
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“I want to make a new industry by combining the real and the virtual,” the executive said. “By connecting all processes via the Internet, the business model of planning, production and sales that Uniqlo has cultivated until now will change into an entirely new business model.”
He went on to say that in the future, he wants the customer to be directly connected to factories, so the company can more efficiently make products that consumers want.
Yanai’s revamp of Fast comes as the designer world is reexamining the fashion calendar, runway shows and buying in order to close the speed gap with firms like Uniqlo and its competitors H&M and Zara and re-excite consumers by adopting the same see now-buy-now-wear now concept they have become accustomed to with fast-fashion retailers. His comments Thursday seemed to indicate that Uniqlo is determined to maintain its speed advantage while at the same time ramp up its design quotient and value-quality ratio.
Uniqlo in the past recruited Jil Sander to do a collection for the retailer, and most recently has worked with Carine Roitfeld and Lemaire on capsule collections.
The Uniqlo founder has already set the goal of making his company the world’s largest apparel retailer by 2020. On Thursday he noted that even if the company fails to meet some of the goals it sets for itself, it will continue setting even higher ones.
He stressed the importance of globalization and digitalization in Fast Retailing’s future growth. This fall, Uniqlo will make its first inroads into the Canadian market with two stores in Toronto. It will also continue to expand in Belgium, and in 2017 will open its first store in Spain.
Yanai revealed his plans as Fast reported that profits deteriorated in the second quarter, causing the retailer to slash its full-year earnings forecast for the second time.
Fast said Thursday that profit for the six months ended Feb. 29 plummeted 55.1 percent to 47.04 billion yen, or $393.40 million at average exchange. Its profitability worsened in the second quarter — it clocked a 30.2 percent slide in the first three months of the year on weak demand for winter apparel during an unseasonably warm season around the world.
The company blamed an appreciation of the yen for the slide in earnings, citing a first-half foreign exchange loss of 22.8 billion yen, or $190.68 million. A weak yen helped boost business in the year-earlier period.
Another reason for the decline in profits was aggressive discounting of winter items by Uniqlo Japan in the first two months of the year. Fast Retailing sold more units than it expected to at the lower prices, cutting into its bottom line.
First-half operating profit dropped 33.8 percent to 99.34 billion yen, or $830.78 million. Net sales for the period, however, grew 6.5 percent to 1.01 trillion yen, or $8.45 billion.
In the first half of Fast Retailing’s fiscal year, Uniqlo International reported a 12.7 percent rise in sales, to 389.2 billion yen, or $3.25 billion.
In Japan, Uniqlo’s e-commerce sales expanded 28.4 percent year-over-year, to a 5.6 percent share of total revenue.
The company cut its full-year profit guidance for the second time — it already did once back in January at the first-quarter mark. The retailer expects net profit for the year ending Aug. 31 to fall by 45.5 percent to 60 billion yen, or $544.43 million at current rates. In January, it said it expected full-year net profit to come in flat at 110 billion yen, or $998.12 million.
The company said operating profit is predicted to drop 27 percent to 120 billion yen, or $1.09 billion. This is down from a previous forecast of 180 billion yen, or $1.63 billion.
Meanwhile, the company kept its full-year sales forecast intact. The company predicts sales will grow 7 percent to 1.8 trillion yen, or $16.33 billion.