Uniqlo Makes Biggest Southeast Asia Bet as CEO Looks Abroad (1)

(Bloomberg) -- Casual clothing chain Uniqlo is taking its biggest chance in Southeast Asia.

The unit of Fast Retailing Co. is opening a store on Singapore’s iconic Orchard Road that will have 2,700 square meters (29,000 square feet) of shopping space on three floors. The store will be Uniqlo’s largest in the region as the brand looks for growth outside Japan to revive flagging profits at its parent.

Fast Retailing is busy opening stores in the U.S., London and across Asia to help reduce its dependency on a home market where Japanese household spending is falling. Billionaire Chairman Tadashi Yanai wants to generate 5 trillion yen ($48 billion) in sales by 2020 to keep Fast Retailing competitive with Hennes & Mauritz AB and Zara-owner Inditex SA.

“Southeast Asia expansion will help Yanai achieve his 5 trillion-yen sales target,” said Dairo Murata, an analyst at JPMorgan Securities Japan Co. “But to achieve that goal in three years will be difficult.”

This will be the 25th store in Singapore for Asia’s largest clothing retailer, bringing its Southeast Asian presence to about 130 outlets. Yanai, Japan’s richest man with a net worth of $18.4 billion, will host a briefing in the city-state Thursday, a day before the store opens.

Uniqlo last September opened a six-story China flagship store in central Shanghai, and Yanai reiterated plans to open 100 stores a year in China on its way to a potential 3,000. The brand’s Southeast Asia presence includes about 30 stores each in Malaysia, Thailand and the Philippines.

That overseas expansion has made Fast Retailing more vulnerable to a strengthening yen, which prompted a cut to its full-year net income forecast in July. Yet recent signs of recovery in the Uniqlo business lifted Fast Retailing’s shares 8.7 percent in August, paring the year-to-date slump in the stock to 15 percent through Wednesday. Shares dropped as much as 1.8 percent to 35,680 yen in Tokyo trading Thursday.

Fast Retailing’s operating income for the third quarter that ended in May rose 19 percent from a year ago as sales in Japan and overseas improved. After the retailer in April posted a 60 percent decline in second quarter operating income, Yanai pledged to “maintain the lowest possible prices at all times” to win back customers.

(Updates with share prices in second paragraph after World of Uniqlo chart.)

--With assistance from Stephanie Wong To contact the reporters on this story: Daryl Loo in Singapore at dloo7@bloomberg.net, Grace Huang in Tokyo at xhuang66@bloomberg.net. To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Michael Tighe

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