Global retailer slowing down U.S. expansion

Did Japanese retailer Uniqlo miscalculate its appeal to American shoppers?



The company, a division of Fast Retailing, is moving into the slow lane with regards to its U.S. expansion. Uniqlo now plans to open only five U.S. locations in its current fiscal year, which began on September 1, 2015, after opening 17 in its most recently completed year.



Uniqlo, which has more than 1,600 stores worldwide, operates 43 stores across the United States.



The news came with Fast Retailing’s annual financial report in which it noted that Uniqlo’s U.S. sales were below forecasts and operating losses had increased. The company said that “this was partly due to the rapid expansion of the store network, with 17 new stores opening in fiscal year 2015, and due to the fact that the Uniqlo brand is still comparatively new to the U.S. market and not yet widely recognize.”



“The brand penetration in big cities such as New York, San Francisco and Chicago — where we will open a new store — is good, but not in the suburbs,” said Tadashi Yanai, Fast Retailing’s CEO on a conference call on Thursday, the Financial Times reported.



In its recently completed year, Fast Retailing’s profit rose 48% to some $916.3 million, helped to a great extent by strong sales in the Greater China market.



Fast Retailing plans to bring some of its top managers to the United States to work on improving things.



But many industry experts say that Uniqlo’s problems are mostly a reflection of a competitive U.S. market in which it faces more established value players, such as Old Navy, H&M and Forever 21. And the chain’s emphasis on sleek but minimally-styled basics may be dimming its appeal with teen mall shoppers.