Uniqlo feels the pinch as Japanese growth remains elusive

FUKUOKA, Japan - April 22, 2016 - PRLog -- Uniqlo feels the pinch as Japanese growth remains elusive

Japanese clothing brand Uniqlo has made a real name for itself by offering stylish clothes at low cost - but in 2014, it surprised many by increasing its prices. Derrick Noble, Vice President of Corporate Trading at Fidea Group, who oversees all allocations of corporate assets says that this was a significant moment for the troubled Japanese economy.


Shinzo Abe, known for his "Abenomics" approach to getting Japan's slow-moving economy back on track, saw Uniqlo's move as vindicating his policies, said Mr. Noble. Uniqlo's reputation and global reach made it a perfect example of how confidence could be restored to Japanese consumers and growth to the economy as a whole.

It didn't last. Fast Retailing Co. Ltd., the owner of the Uniqlo brand, found that the price increases did little to improve fortunes, and recently changed tack by restoring its previous low prices. Discounts were introduced that were even steeper than before, said Mr. Noble, as Abe's expansionary vision failed to take off.

He pointed to an interview given last week by Fast Retailing's CEO, the widely popular Tadashi Yanai, in which he was candid about the situation. Mr. Yanai made it clear the things were not going well, despite the Bank of Japan's efforts to stimulate growth.

These measures were brought into the spotlight in January, when the BOJ took the decision to move to negative interest rates for investors. This, Mr. Noble pointed out, had done little to improve the situation, with the yen still riding uncomfortably high and both stock prices and consumer sales stuck in the doldrums.

The Japanese economy shrank in the fourth quarter of 2015, with both domestic consumption and export figures proving below expectations. Fidea Group analysts underlined the fact that many economists believed there would be a further shrinkage in the first three months of 2016, returning Japan to a recessionary state.

Mr. Noble pointed to a comment by Dai-ichi Life Research Institute's chief economist, Yoshiki Shinke, in which he suggested that a major problem was that of continuing flat wage levels. Consumers, he said, were more inclined to spend despite price increases if their own incomes were rising commensurately. This had contributed to Fast Retailing again cutting its full-year forecast.

The group shared the problems of many retail and service companies in Japan, said Mr. Noble; that of failing to get enough customers through the door - and failing to get those who do visit to spend more Luxury brands like Louis Vuitton had borne the brunt of this change in habits, while Fast's budget brand, GU, had been a rare light in the gloom.

The global ambitions of the company could be seen by its strong push into the massive United States clothing market, said Mr. Noble - around 100 Uniqlo-branded stores were planned to open in the near future, according to Mr. Yanai. Fast Retailing is also considering introducing brands like J Brand and Comptoir des Cotonniers to more countries.

Initiatives like that in the US, Mr. Noble believed, were indicative of the group and its super-wealthy CEO's continued drive to see Uniqlo transformed into one of the most globally valuable brands. Nevertheless, its American business has already show signs of strain, with losses mounting and some stores closing over the last year.

Mr. Noble underlined the difficulty of succeeding in a market where it was being squeezed on price from the likes of Zara and H&M, as well as facing stiff competition from established rivals such as Gap Inc. He drew particular attention to Fast Retailing's 23.4 billion yen operating profit for the quarter to February - far lower than forecasters had been expecting.

Fidea Group has extensive experience managing the wealth of high net and ultra-high net worth individuals, backed by the full resources of an established wealth management firm.

http://fideagroup.blogspot.com/