Fast Retailing to raise Uniqlo prices in Japan

Wednesday, 11 June 2014

Fast Retailing, parent company of Japanese fashion label Uniqlo, is preparing to increase its prices in its home market in a battle to end the country's ongoing deflation and help restore profit margins.

Due to higher costs in the country, a global increase in the price of wool and cotton, as well as a weaker yen, Fast Retailing will be increasing Uniqlo's prices by roughly five percent by next month.

According to Reuters, Fast Retailing was initially hesitant about increasing its prices and feared that a price increase may negatively affect its sales due to Uniqlo's image of affordable fashion. However, investors pushed for the increase to help counter declining profits in Japan.

Fast Retailing was also encouraged to raise prices after witnessing Uniqlo's same-store sales growing 3.3 percent in April and 4.1 percent in May compared to the year before. The higher in-store prices in Japan will apply from next month onwards for the new fall and winter collections.

In addition to the weak yen and increased wool and cotton prices, Uniqlo is also struggling with higher labor costs, as Fast Retailing is poised to take on 16,000 new workers in Japan. Uniqlo's operating profit margin is expected to decline for the fourth consecutive year, from 21.4 percent in 2009-2010 to to 14.2 percent for the financial year which closed last August.

However, overall operating profit for Fast Retailing, which also owns fashion labels such as GU and Theory, is predicted to set another record for the year to August, thanks to the company's ongoing expansion scheme, which is heavily focuses on growth in Asia.

Related News