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Fast Retailing unseats Inditex in terms of market capitalization for the first time

By Angela Gonzalez-Rodriguez

17 Feb 2021

The parent group of Uniqlo has unseated Inditex for the first time in history, rising to the title of the world’s largest retailer by market capitalization after closing the sessions on Monday and Tuesday, exceeding 100 billion dollars in value on the stock market.

The value of Fast Retailing, the Japanese company that owns the fast fashion chain Uniqlo, reached 10.87 trillion yen (about 103 billion dollars) at the close of the stock market on Tuesday. It should be noted that this is the first time that Fast Retailing has surpassed Spanish Inditex, which had a market capitalisation of approximately 99,000 million dollars at the close of Tuesday’s trading session.

Fast Retailing stock surpasses 100,000 yen for the first time

Fast Retailing’s stock has only appreciated since last August, gaining seven consecutive sessions to close this Tuesday at 102,500 yen per share, 3 percent more than the previous session. Additionally, Fast Retailing has broken another record this week, surpassing 100,000 yen per share for the first time.

This closure places the group at the top of the global garment industry in terms of market capitalisation, according to ‘Asia Nikkei’. From the financial publication, they point out that the profitability of Fast Retailing’s capital stands at 9 percent for the fiscal year ended last August, while Inditex enjoys a 24 percent return for the comparable period. In terms of inventory turnover, Fast Retailing’s three-month index is below 1.5, while Inditex’s is 2 percent.

Tie in digital sales, Inditex gains in revenue

Fast Retailing and Inditex lead the fast fashion segment in terms of online sales, an area that will determine the growth of both companies and in which they currently compete for the first and second place. Specifically, last year the Japanese company raised the contribution of its online sales from 11.3 percent to the current 15.6 percent. By comparison, e-commerce accounted for 14 percent of Inditex’s revenue in 2019; the Spanish group plans to raise that figure to 25 percent by next year.

The Japanese retailer’s share price has risen steadily since last August 2020. The market has repeatedly applauded Fast Retailing’s focus on Asian markets, especially China. In the last fiscal year, Fast Retailing’s operating margin in China - a region that includes the Hong Kong and Taiwan territories - stood at 14.4 percent, up from 13 percent in Japan. Although it has been consolidating its growth in Asia in recent years (Zara has approximately 20 percent of its stores in the region), 70 percent of Zara’s outlets are in the United States and Europe, markets that have been affected by multiple locks.

It is in revenue generation where the Japanese group has to step on the accelerator: Fast Retailing remains in third place with approximately 2 trillion yen (18.9 billion dollars) for the previous fiscal year. Inditex leads the way with 28.2 billion euros (34.1 billion dollars) for the year ending January 2020. H&M Group takes second place with 187,000 million Swedish krona (22,5 million dollars) for the financial year that ended last november. According to its latest quarterly results report, Inditex reported revenues of 866 million euros (60 percent more than Fast Retailing in the same time frame).

Photo credits: Uniqlo Official Website