Following the release of Fast Retailing figures for Q1 FY2020/21; Pippa Stephens, Retail Analyst at GlobalData, a leading data and analytics company, comments:
“Fast Retailing’s strong reliance on Asia has allowed it to eFast Retailingxperience an impressive rebound in sales during Q1 FY2020/21, with group revenue falling by just ¥3.7bn to ¥619.8bn, particularly driven by sales in Japan and China. These countries have both seen COVID-19 cases mostly suppressed, encouraging consumers to return to physical stores and releasing pent up fashion demand, contributing to the retailer’s enviable operating profit growth of ¥21.4bn, which was also supported by lower discounting this year on the back of unseasonably warm weather in its domestic market during Q1 FY2019/20. Fast Retailing’s main hindrance is its expansive store estate across both Europe and North America; two of the current epicentres of the pandemic. While the retailer still plans to expand its portfolio further within these regions, it should wait until COVID-19 has been successfully mitigated in these areas, as consumer demand for clothing & footwear will continue to be significantly dampened while consumers are stuck at home and physical stores remain closed.
Unsurprisingly, Fast Retailing’s casualwear brands, Uniqlo and Gu, recorded the strongest sales during Q1 FY2020/21, while its smaller global brands, including Theory and Comptoir des Cotonniers, saw sales fall by 22.3% during the period. The latter have been hindered by their more formal ranges, which have lost demand during the crisis due to the ongoing cancellation of events and the rise of home-working, whereas Uniqlo and Gu benefitted from increased desirability of loungewear and comfortable styles such as sweatshirts and knitwear, as consumers continued to spend more time at home. While some of Uniqlo’s products extend into premium price brackets, which could potentially be off-putting during this period of economic instability, it has a strong reputation for producing high quality and long-lasting items, making shoppers willing to invest.
As consumers become increasingly concerned about the environmental impacts of their fashion purchases, Fast Retailing is catering to their changing demands with an instore garment recycling program and increased use of recycled materials within its garments. These initiatives are also well communicated to customers via instore signage and social media, which is highly advantageous to its brand image. To become even more competitive with rivals like H&M, which is well renowned for its sustainable credentials, Uniqlo should increase the proportion of its ranges made from eco-friendly fabrics and become even more transparent with customers about the sourcing of each product, via labelling and detailed descriptions on its website.”