Uniqlo leaves behind Zara as most valuable apparel firm

Fast Retailing, the Japanese parent of casual clothing chain Uniqlo, now tops the global apparel industry in terms of market capitalisation as its value reached 10.87 trillion yen ($103 billion) at the end of trading on February 16. This is for the first time that Fast Retailing topped Zara's Spanish parent Inditex, which had a market cap of €80.8 billion ($97.5 billion) at the same moment, according to Asia Nikkei.

Fast Retailing’s share price has steadily climbed since last August. The casual wear specialist is also perceived as well positioned to capitalise on the changing habits of consumers, who are more inclined to dress casually as telework spreads, the Asia Nikkei report said.

Fast Retailing operated 2,298 Uniqlo stores around the world in November. Three-fifths of those stores are located in Asia outside Japan. China is the second biggest market after Japan, with 815 stores at 791 locations.

Inditex operates 467 stores in China. Last October, Zara opened in Beijing its largest Asian location. meters.

For the previous fiscal year ended August, the operating margin of the company in greater China, which includes Hong Kong and Taiwan, stood at 14.4 per cent, above Japan's 13 per cent. Meanwhile, 70 per cent of Zara's outlets are located in the United States and Europe, which were affected with multiple lockdowns. Zara has roughly a fifth of its stores in Asia.

Investors have valued Fast Retailing's efforts on the digital front too. The company adopted the ‘digital consumer retailing’ concept in 2016, which involves analysing data from online and store purchases from IC tags attached to all merchandise. Fast Retailing has partnered with Google and other companies to develop a manufacturing infrastructure powered by artificial intelligence.

But when it comes to revenue, Fast Retailing remains in third place at roughly 2 trillion yen ($18.9 billion) for the previous fiscal year. Inditex leads the way at €28.2 billion ($34.1 billion) for the year ended January 2020, while Sweden's H&M is runner-up with 187 billion kronor ($22.5 billion) for the financial year through last November.

Most of Inditex's production facilities are in Spain. It minimizes its inventory volume by producing clothes well-suited to logistics, with air transport used to deliver cargo in a short span of time. Because the company is able to sell out its merchandise without offering discounts, it rakes in ample gross profit.

In online sales, Fast Retailing is neck and neck with Inditex. In the previous fiscal, the Japanese company raised digital's share of total sales to 15.6 per cent from 11.3 per cent. E-commerce accounted for 14 per cent of Inditex's revenue in 2019, but it plans to raise that figure to 25 per cent by next year.