Fast Retailing eyes up expansion for GU in US and Europe

Fast Retailing, the parent company of Uniqlo, has set its sights on expanding the presence of its sister label GU in the United States of America and Europe as part of its broader aim to become a global retailer, achieving 10 trillion yen (66.3 billion USD) in annual sales.

As Asia's largest apparel producer, Fast Retailing believes that GU can achieve the same success as Uniqlo. “We can generate as many GU stores as there are Uniqlo ones," stated Takeshi Okazaki, chief financial officer at Fast Retailing, in an interview with Bloomberg.

GU, pronounced as the letters G and U, is slightly lower priced than Uniqlo and aimed at younger consumers. Although the brand currently has a strong presence in Japan, it remains lesser known in other countries.

“GU has the same potential as Uniqlo” - Takeshi Okazaki, Chief Financial Officer at Fast Retailing Group

Fast Retailing aims to solidify its international footprint as part of the company's founder, Tadashi Yanai's ambition to transform it into a global powerhouse. Yanai's strategy involves increasing the annual profit to five trillion yen in the coming years, with GU contributing approximately 700 billion yen, as Okazaki explained in the interview.

GU has already made its initial push into North America, opening its inaugural pop-up store in New York City's SoHo district in 2022. “We want to make GU a store that’s overflowing with trendy products that are easily affordable and that makes people feel like they want to enjoy fashion,” said Okazaki. “To achieve this, we can’t just stay within Japan.”

Recognizing the potential of tapping into overseas markets, Okazaki pointed out that GU benefits from a strategic synergy with Uniqlo, which will simplify the process of establishing new GU stores. By utilizing Fast Retailing's existing groundwork with Uniqlo and catering to international preferences without having to increase the brand's product range, it should be easier to grow in new markets, according to Okazaki.

“If this was 10 years ago, we couldn’t do this, but people’s information and the trends of clothes are becoming quite shared internationally. Sometimes, we have to add a certain thing, but for the most part, we control the overall number of products and make them globally applicable.”

Fast Retailing's expansion beyond Japan and Asia is proving successful, as evidenced by its higher-than-expected operating profits in the United States and Europe for the first fiscal quarter ending in November.

According to the company's fiscal year-end report, Fast Retailing plans to speed up the international growth of Uniqlo, aiming to open 20 stores annually in North America and 10 in Europe.

While international sales constituted over half of Uniqlo's revenue in the recent fiscal year, GU has primarily prospered in Japan. However, despite its domestic success, GU's yearly sales reached only 295 billion yen, a stark contrast to Uniqlo's 2.33 trillion yen, generated from its extensive network of over 2,400 stores worldwide.

Nevertheless, Fast Retailing is ready to accelerate GU's growth. “We intend to aggressively make the necessary investments over the next few years to make GU big," concluded Okazaki. “In the future, I see Uniqlo and GU creating a large market together of clothes made for all people."