Struggles in China Hurt Uniqlo’s Bottom Line

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Uniqlo Co. Ltd.’s strategy of raising prices in the face of rising costs has taken a toll on the Japanese clothing retailer’s bottom line in China due to growing competition and thriftier consumers.

The fast-fashion chain’s Greater China profit and revenue both fell in local currency terms during the March-May period, dragged down by poor performance on the Chinese mainland and in Hong Kong, according to earnings results released last month by its parent company, Fast Retailing Co. Ltd. The results did not provide specific earnings figures for the period.

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Uniqlo's revenue and profit in Greater China fell in local currency terms during March-May, impacted by increased competition and cautious consumer spending.
Fast Retailing cited factors like poor consumer demand, unseasonal weather, and high comparison base for the decline, with Greater China accounting for 22.1% of total revenue.
To counter weak performance, Uniqlo plans to adjust its strategy in China, including changes to store openings and product offerings.

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Who’s Who

Uniqlo Co. Ltd.: Uniqlo Co. Ltd., a Japanese clothing retailer, faced declining profit and revenue in Greater China due to increased competition and thrifty consumers. For the nine months ended May 31, 2024, it generated nearly 522.5 billion yen in Greater China, but this accounted for 22.1% of parent company Fast Retailing's total revenue, down slightly from a year earlier. Rising product prices and emerging local alternatives have negatively impacted its performance. Uniqlo plans strategic adjustments to revitalize sales.

Fast Retailing Co. Ltd.: Fast Retailing Co. Ltd. is the parent company of Uniqlo. It reported falling profit and revenue for Uniqlo in Greater China during the March-May period, due to rising costs, heightened competition, and thriftier consumers. For the nine months ended May 31, Uniqlo generated revenue of nearly 522.5 billion yen ($3.6 billion) in Greater China, accounting for 22.1% of Fast Retailing’s total revenue.

Urban Revivo: Urban Revivo is a local fast-fashion brand in China challenging Uniqlo. During the 618 sales event, it ranked second in gross merchandise value for women's clothing on Tmall, following Uniqlo. Its parent company launched a sub-brand called Benlai in 2022 to compete directly with Uniqlo.

Benlai: Benlai is a sub-brand launched by Urban Revivo’s parent company in 2022, positioned as a direct challenge to Uniqlo. The brand is part of the growing local competition in the Chinese fast-fashion market, contributing to Uniqlo's struggles in maintaining its market share.

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What Happened When

March 2023：: Fast Retailing announced that it would begin raising the pay of staff in Japan by up to 40%.

Since June 2023：: Uniqlo raised the prices of several products due to increased costs.

Starting in October 2023：: Uniqlo’s China arm gave some of its workers raises as high as 44%.

March-May period of 2024：: Uniqlo’s Greater China profit and revenue fell in local currency terms.

By May 31, 2024：: Uniqlo generated revenue of nearly 522.5 billion yen ($3.6 billion) in Greater China.

May 20, 2024 to June 20, 2024：: Urban Revivo was second only to Uniqlo in gross merchandise value of women’s clothing on the Tmall shopping platform during the 618 sales extravaganza.

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