Japanese fast-fashion retailer Uniqlo is scaling back its U.S. expansion plans, from a goal to open 15 new stores to just five, for a total of 44. The company also announced Thursday earnings that missed estimates, prompting parent Fast Retailing Co. to lower its profit forecast for the fiscal year.
The company says it hasn’t found the same level of success at American malls that it’s found in its urban locations here.
The retailer is also finding that fast-fashion rival H&M is well established in the US, including in malls, and a tough competitor to beat in the suburbs.
Fast Retailing CEO Tadashi Yanai has clearly and often expressed his ambitions to overtake H&M and Zara as a worldwide fast-fashion apparel retailer. But it looks like the force and speed of Uniqlo’s expansion in the U.S. has been too much, too soon.
The retailer may need to scale back its ambitions or, if it’s true that it finds favor with city dwellers, find ways to introduce itself to the suburban consumer, outside the cities and away from the coasts. The reality, however, is that, when it comes to apparel style, the urban-suburban divide in the U.S. began diminishing long ago, and urban downtown retail centers have long resembled the specialty retail mix in malls quite a lot.
“The brand penetration in big cities such as New York, San Francisco and Chicago—where we will open a new store—is good, but not in the suburbs,” Yanai said in a call with reporters, according to the Financial Times.