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Uniqlo T-shirts Manufacturer Bids on US Department Store

Tuesday 10th of July 2007 07:55:36 PM

Japanese retailer, Fast Retailing, the owner of the Uniqlo clothing line, recently put in a bid to buy Barneys of New York, a US-based department store owned by Jones New York. Uniqlo, which sells mostly T-Shirts, pants, and other clothing opened a New York retail store last year, but sales were disappointing because the brand was not well known in the US. Buying a recognised department store would allow the company to sell its clothing and increase sales because of Barney's reputation.

"Their brand recognition in the US is zero because they had to start from scratch. It takes time to build up a new operation with directly owned stores, especially in the US, which is so competitive," says Dairo Murata, retail analyst at Credit Suisse. Uniqlo has experienced similar issues in the UK as well and had to scale back the number of stores it opens until the brand becomes more known.

In its bid for Barney's, Fast Retailing has some competition from Dubai-based Istithmar, which is an investment group eager to buy the department store. They have already put in a bid that has been accepted by Jones New York. However, the company is inviting other companies to bid, which could lead to a bidding war.

There are over 780 Uniqlo shops that sell T-Shirts and other clothing, but only 30 operate outside Japan. Expanding into other markets will require expensive ads campaigns, or acquiring stores that are already established. In order to remain competitive in the retail market, Fast Retailing also has to raise its sales, which were down 15% after the winter season ended and merchandise like jackets and warm shirts were reduced to sell quickly.

(c)Donald Cook, www.sxc.hu