Uniqlo overtakes Inditex (Zara) as the most valuable fashion company

For the first time, the stock value of Fast Retailing, the parent company of leisurewear chain Uniqlo, has surpassed the value of Inditex, the group that operates Zara, among others. In terms of market capitalisation, the Japanese fashion company is now at the very top of the global clothing industry.

Strong positioning

Since August, Fast Retailing’s share price has risen steadily. As a result, earlier this week the stock market value of the retailer amounted to the equivalent of approximately 85 billion euros, reports Nikkei. Investors particularly appreciate Fast Retailing’s focus on Asia, and, in particular, China, where the economy has quickly recovered from the Covid crisis. Besides, the leisurewear specialist is well-positioned to capitalise on the changing habits of consumers, who tend to dress more ‘casually’ as working from home becomes increasingly mainstream.

Fast Retailing operates around 2,300 Uniqlo stores around the world. Its home market of Japan has 815 stores, with China as the second-largest market with 791 locations. Sixty per cent of all stores are in Asia, excluding Japan.

On that matter, the situation is therefore completely different to that of Zara: 70 per cent of its shops are in Europe and the United States, markets that have been hit hard by successive lockdowns. Only 20 per cent of Zara’s shops are located in Asia.

Digitalisation

Fast Retailing has also made great efforts on the digital side. In 2016, it launched the concept of “digital consumer retailing”, which involves collecting and analysing data from all online and physical purchases online. The Japanese company is also working with Google and other external partners to develop a production infrastructure powered by artificial intelligence.

In terms of online sales, Fast Retailing and Inditex are hardly any different. In the previous financial year, Fast Retailing increased its online share of total sales from 11.3 per cent to 15.6 per cent. Inditex, for its part, derived 14 per cent of its 2019 revenue from e-commerce, but the company aims to increase that share to 25 per cent by next year.

Growth potential

Purely based on sales, Fast Retailing does still rank third in the fashion industry at 15.6 billion euros, after Inditex (28.2 billion euros) and H&M (18.5 billion euros). The Spanish clothing giant also continues to make significantly more profit than its Japanese rival.

Still, analysts think that Fast Retailing is better armed to realise growth in the future, in particular, because of its extensive store network in Asia. Inditex “only” has 467 stores in China. Last October, Zara opened its largest Asian outlet in Beijing, with a surface area of more than 3,000 m².