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Uniqlo from Japan incurs losses in the US

Fast Retailing’s owner, Tadashi Yanai, opened the flagship Uniqlo store on New York’s Fifth Avenue in 2011, with a vision of making it the world’s top brand. However, ten years after the Japanese billionaire’s first foray in the US market in 2005, Fast Retailing has incurred losses.

Uniqlo casual clothing chain has lost $5 billion (Dh18.35 billion) in market capitalisation. This is a drop of over 12 per cent; it shocked investors with a rare miss in its annual profit targets. The brand’s low recognition in suburban America and a weak management were blamed for the expanding losses at its US operations by executives.

However, analysts believe that the problems in the US are quite deep. Sho Kawano, an analyst at Goldman Sachs says they need to redo everything from products, branding, and e-commerce, to management and that there are huge challenges ahead. Kawano estimates US losses were over 10 billion yen ($84 million, or Dh304.38) for the fiscal year that ended in August, and anticipates the US business will remain loss-making.

Yanai, though says that he wants sales to reach 100 billion yen in three years, while they do not disclose their US revenue. Sales in China, Hong Kong and Taiwan have already topped 300 yen billion. Yanai said that the retailer would be more selective about choosing store locations and the company has plans to open only five new Uniqlo stores in the US compared with 17 for the 2014-15 fiscal year. The brand would be bringing together and dispatch to the US their elites worldwide to rebuild our management, said Yanai.

 
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