Japanese Retailer UNIQLO Losses Narrow As Sales Rise Four-Fold
Japanese retailer UNIQLO appears on track to make a maiden profit in Australia this year after sales rose almost four-fold in 2015 and losses halved.
According to audited accounts lodged with the corporate regulator last week, UNIQLO Australia's sales rose 262 per cent to $118.9 million in the 12 months ended August as the company opened another five stores, taking its footprint to six stores.
UNIQLO opened its seventh store in Eastland shopping centre in Melbourne in October and its eighth at Indooropilly in Brisbane earlier this month. It plans to open another two stores – in Sydney's Chatswood and Queen St in Brisbane – in early 2016 while searching for sites in South Australia and Western Australia.
The new stores are likely to lift sales in 2016 to more than $200 million and generate economies of scale which will help UNIQLO break even or deliver its first profit since setting up shop in Australia in 2013.
UNIQLO Australia reported a net loss of $3.03 million in 2015 compared with a loss of $6.04 million in 2014, taking accumulated losses to $10.1 million.
Gross profits rose from $19.9 million to $69.9 million in 2015, representing a gross margin of 58.8 per cent, reflecting the fully vertically integrated nature of UNIQLO's operations.
The retailer, known overseas as a "department store killer", sells a wide range of women's, men's and children's apparel under the UNIQLO brand and competes not on fashionability but on quality, functionality, affordability and customer service.
UNIQLO Australia's chief development officer, Matt Parker, told Thetradeboss last month that sales to date had exceeded the company's expectations, fuelled by strong demand for its iconic ultra-light down jackets and vests, cashmere sweaters, linen shirts, and temperature-regulating "heattech" and "airism" inner-wear.
The Japanese retailer, which is taking sales from department stores and specialty retailers, appears to be faring slightly better than other global apparel chains that have entered the Australian market over the last few years.
At Zara, profits slumped by one-third to $15.5 million in the 12 months ended January 2015, despite a 26.8 per cent lift in sales to $179 million, as the company invested heavily in new stores and sales at existing stores declined.
Swedish chain H&M lost $2.89 million before interest and tax in the 12 months ended November 2014 on sales of $68 million. H&M's 2015 accounts will be released in March.
UNIQLO has not disclosed its long-term growth plans, but Citigroup analyst Craig Woolford believes there is scope for 20 to 25 UNIQLO stores over time.
UNIQLO has more than 1600 stores in 17 countries, and founder Tadashi Yanai wants the 31-year-old chain to become the market leader in casual apparel in Australia and the global leader by 2020.
"We'd like to take our brand to as much of Australia as we can," said Mr Parker.