[Company analysis] Fast Retailing Co., Ltd. (ファーストリテイリング)

「Fast Retailing Co., Ltd. (ファーストリテイリング)」 is a holding company that owns the famous clothing company「UNIQLO CO., LTD」that has world's 3rd largest  casual clothing company in terms of sales. As for the market capitalization, it is the second largest in the world after「Inditex」, which owns 「ZARA」. It is a representative Japanese company that promotes in-house English, and has approximately 56,523 consolidated employees.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Fast Retailing Co., Ltd.
Company name (Japanese)	ファーストリテイリング
Date of establishment	Wednesday, May 1, 1963
Headquarters location	〒754-0894 山口県山口市佐山 717-1
Capital	10,274
Consolidated sales	2,290,540
Consolidated operating profit	257,636
Consolidated total assets	2,010,558
Consolidated capital	983,534
Capital adequacy ratio	48.9%
Consolidated number of employees	56,523

 

 

 

2. Summary and Features

 
In 1984, Yanai Tadashi(柳井正) established the first unisex casual clothing store in Hiroshima Prefecture under the name「UNIQUE CLOTHING WAREHOUSE」. And this is the direct predecessor of current「Uniqlo」. Originally, this company has american style clothes store that was decorated with classic movie posters and celebrity portraits. They made partnership with factories in China and built a simple business model. procure the product at low price and sell the product at low price. After the collapse of bubble economy, sales of「Uniqlo」grew rapidly due to its cost-efficient clothes.

Since 1997,「Uniqlo」have increased the proportion of their private brand products and implemented a business conversion to a "Speciality store retailer of Private label Apparel(SPA)" modeled on the American clothing retailer 「GAP」. As a result of this challenge, they were abled to procure low-price, high-quality products which are ideal for Japanese market. Eventually,「Uniqlo」has become the largest company in the clothing distribution industry not only in Japan but also in entire Asia.

 

As above mentioned, the major feature of「Uniqlo」is that they offer casual clothes with excellent cost-efficiency. This company manages everything from product planning, material procurement to production with its cooperating factories. So the inventory burden is relatively greater and become risky. To overcome this,「Uniqlo」conducts weekly profit / loss management system. Of course, this system cause increased management cost. But the thing is, thanks to this system, customer response about each items swiftly feedback to management level. And with this information, distribution can be optimized, and this minimalize the inventory burden risky.

Besides,「Uniqlo」is famous for its Function-oriented products such as "HEATTECH" that is underwear with improved heat retention and "BRATOP" which is a camisole tank top with a built-in brassiere cup. As for the oversea business, they opend stores in 18 countries including the United Kingdom in 2001. In fact, their oversea business had been in red except for Honkong, but since 2008, it became black. 

 

 

 

3. Major Business

 

■ Japan domestic UNIQLO business
The Japanese clothing market itself is shrinking. Sales account for 40.6% of the total.

■ Overseas UNIQLO business
It is a business that is still growing, and their stores are mainly being deployed in China, Southeast Asia, and Oceania. Sales account for 42.1% of the total.

■ GU business
Taking advantage of low price, they are aiming to expand into overseas markets such as China and South Korea while continuing to open a large number of new stores in the Japanese market.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		1,861,917	2,130,060	2,290,540
Consolidated operating profit		176,414	236,212	257,636
Consolidated total assets		1,388,486	1,953,466	2,010,558
Consolidated net assets		762,043	902,777	983,534
Breakdown of sales	Japan domestic UNIQLO business	810,734	864,778	872,957
	Overseas UNIQLO business	708,171	896,321	1,026,032
	GU business	199,139	211,831	238,741
	Global brand business	141,003	154,464	149,939
	Others	2,868	2,664	2,877