After suffering weak sales for nearly two years following the end of its phenomenal “fleece jacket boom,” casual clothing chain Uniqlo is again enjoying strong sales.
Since December, the chain has seen double-digit growth in same-store monthly sales, with February posting an 18.4 percent increase from a year earlier.
Reflecting its recent performance, the share price of Uniqlo operator Fast Retailing Co. is up 2.8-fold from a year ago; its share price closed at 7,460 yen on Tuesday.
Credit Suisse First Boston Securities (Japan) raised its target share price to 8,700 yen from 7,500 yen earlier this month.
The company’s earnings have been “brisker than expected,” CSFB analyst Dairo Murata said in a report.
Some analysts point out that the strong figures have been buoyed by technical factors such as the chain’s weak sales a year ago, which make this year’s figures look strong by comparison, and an extra day in February this year because it’s a leap year.
But there seems to be more to it.
Deviating from its original line of unisex products, Uniqlo has beefed up its line of women’s clothing since early last year, releasing more design-oriented pants and jeans. Analysts say this has won consumers’ approval.
CSFB’s Murata said women’s trousers, such as stretch boot-cut pants, and limited edition jeans produced in collaboration with fashion magazine “non-no” were the best sellers in the chain’s women’s line.
“Our efforts in bolstering merchandising and store operations are beginning to bear fruit,” Fast Retailing President Genichi Tamatsuka told a news conference Tuesday.
Sales of women’s clothing comprised 30 percent of the company’s total revenue for the September-November quarter, up from 25 percent the previous year.
Tamatsuka said the chain will further expand its women’s line — this time taking a more intimate approach.
The chain said it will introduce 55 women’s underwear items beginning next month. It will initially sell the items on its Web site before expanding the range to its 300 outlets by spring next year.
The new range of underwear marks the chain’s first attempt to sell lingerie as a mainstay product.
And in keeping with its image, Uniqlo will continue to offer clothing at low prices. A bra, for example, will sell for 1,000 yen.
Tamatsuka said there is strong consumer demand for inexpensive underwear. The company aims to increase sales of female underwear, socks and home wear to 60 billion yen in the next three to five years from 20 billion yen at present.
But Hiroshi Koba, senior analyst at Mitsubishi Securities Co., said expanding the range of women’s products is not enough to ensure Uniqlo’s continued growth.
“A women’s line is very important,” he said. “But I think at some point it will be necessary for the chain to expand its unisex line.”