Uniqlo will raise prices on its upcoming autumn and winter garments by about 5 percent, a company source said on Tuesday, as the apparel chain owned by Fast Retailing Co. tries to offset the effects from rising raw material costs and the weaker yen.
The first-ever price hike by Uniqlo, which has kept prices low with a business model that incorporates the production process from design to final sale, may prompt its competitors to follow suit and thereby help lift Japan out of chronic deflation.
The price hike for products coming out this summer reflects the growing costs of raw materials such as cotton and wool, the source said.
The weakening of the yen has made it more expensive for Fast Retailing to import its own products, which are made in foreign countries such as China.
The company wants to offset the price increase by upgrading the quality of its products, the source said.
It plans to expand its lineup of jeans and other trousers using a stretch fabric, as well as with outerwear made to retain heat.
Uniqlo had been able to ward off price hikes by cutting production costs. But the rising cost of raw materials has proven too much to overcome.
Prices will be reduced for existing products not subject to the price hike, the firm said.
Fast Retailing logged a 4.1 increase in same-store Uniqlo sales in May from the same month a year earlier, the seventh straight month of growth. Demand was solid despite the consumption tax hike that took effect April 1.
The company has said earlier it was seeing little impact from the tax hike on its sales, which may have helped it push ahead with the price rise.
Uniqlo has seen brisk sales of its UT T-shirt brand. Recently, it launched a new service, UTme, to let customers design their own T-shirts on a smartphone or tablet computer.
Suteteko summer underwear, which revived the traditional long, thin design favored by older Japanese, and AIRism innerwear, using advanced fibers to ensure comfort, have also seen strong demand, according to the company.
Fast Retailing had 849 Uniqlo stores in Japan and 534 abroad at the end of February. Group sales stood at ¥1.14 trillion for the year through August.