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Uniqlo posts Rs 129 crore sales, net loss of Rs 64 crore during first year in India

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Mumbai: Japanese casual clothing chain Uniqlo has posted net loss of Rs 64 crore with sales of Rs 129 crore during FY19-20, lagging behind fast fashion rivals Zara and H&M that performed better in their first year of operations.

The financials of Uniqlo, that opened its first store in October last year, is still better than several other apparel brands considering that it had four stores with many operational for just few weeks until the fiscal year end. During their first year, H&M’s Indian unit posted Rs 194 crore in sales in 2015, while Zara had clocked revenues of Rs149 crore in 2010. While both companies had opened their first store in October that year, reflecting six-month performance, the European rivals became profitable in their launch year.

Experts feel average price-tag by rivals is about 25–30% lower than Uniqlo, and the retailer needs to rationalise pricing strategy and tweak merchandise to suit Indian preferences.

“Uniqlo entered very late in India compared to H&M and Zara which saw limited competition in the market when they opened their store. As a result, Uniqlo had to spend higher on advertising and discounting. Also, options at Uniqlo are more subtle and limited but Indian consumers want more variety from lifestyle brands,” said Abneesh Roy, senior vice president at Edelweiss Securities.

During the financial year under review, there has been allotment of 30.63 lakh equity shares aggregating Rs 170 crore to its holding company, Fast Retailing, Japan on right basis, according to documents sourced from Altinfo, a data insights firm.

As the world’s second most-populated country, India is an attractive market for apparel brands, especially with youngsters increasingly embracing western-style clothing. Uniqlo, the world’s third-largest apparel retailer after Zara and H&M, entered India amid a weak macro economy and stressed consumer sentiment. Two weeks ago, the Japanese brand launched e-commerce operations in the Indian market to cash in the channel that is increasingly being preferred by shoppers due to covid related issues.

Before opening their first store in India, Uniqlo told ET that India could outpace China and its home country to become its largest market though it will take about a decade for the country to mature as a large market and a sourcing base for Asia’s largest fashion retailer. In June last year, Tadashi Yanai, founder and CEO of Fast Retailing, which owns Uniqlo, told ET that India could be “number one and the most exciting market in the world” without disclosing a timeframe.

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