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
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
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.