SINGAPORE/TOKYO (BLOOMBERG) - Casual clothing chain Uniqlo is taking its biggest chance in South-east Asia.
The unit of Fast Retailing Co is opening a store on Singapore's iconic Orchard Road that will have 2,700 square metres (29,000 square feet) of shopping space on three floors of Orchard Central. The store will be Uniqlo's largest in the region as the brand looks for growth outside Japan to revive flagging profits at its parent.
Fast Retailing is busy opening stores in the US, London and across Asia to help reduce its dependency on a home market where Japanese household spending is falling. Billionaire chairman Tadashi Yanai wants to generate 5 trillion yen (S$66 billion) in sales by 2020 to keep Fast Retailing competitive with Hennes & Mauritz AB and Zara-owner Inditex SA.
"South-east Asia expansion will help Yanai achieve his 5 trillion-yen sales target," said Mr Dairo Murata, an analyst at JPMorgan Securities Japan Co. "But to achieve that goal in three years will be difficult."
This will be the 25th store in Singapore for Asia's largest clothing retailer, bringing its South-east Asian presence to about 130 outlets. Mr Yanai, Japan's richest man with a net worth of US$18.4 billion, will host a briefing in Singapore on Thursday (Sept 1), a day before the store opens.
Uniqlo last September opened a six-story China flagship store in central Shanghai, and Yanai reiterated plans to open 100 stores a year in China on its way to a potential 3,000. The brand's South-east Asia presence includes about 30 stores each in Malaysia, Thailand and the Philippines.
That overseas expansion has made Fast Retailing more vulnerable to a strengthening yen, which prompted a cut to its full-year net income forecast in July. Yet recent signs of recovery in the Uniqlo business lifted Fast Retailing's shares 8.7 per cent in August, paring the year-to-date slump in the stock to 15 per cent.
Fast Retailing's operating income for the third quarter that ended in May rose 19 per cent from a year ago as sales in Japan and overseas improved. After the retailer in April posted a 60 per cent decline in second quarter operating income, Mr Yanai pledged to "maintain the lowest possible prices at all times" to win back customers.