TOKYO – Fast Retailing, owner of the Uniqlo brand, wants to ramp up the presence of its other fashion label GU in the US and Europe, as Asia’s largest apparel maker accelerates efforts to become a global retailer with 10 trillion yen (S$89.3 billion) in annual sales.

“GU has the same potential as Uniqlo,” chief financial officer Takeshi Okazaki said in an interview. “We can generate as many GU stores as there are Uniqlo ones.”

The brand, pronounced as the letters G and U, sounds the same as the word jiyu, or freedom, in Japanese. While GU, with slightly lower prices than Uniqlo and clothes aimed at a younger clientele, has a solid presence in Japan, it is less known in other major markets.

Building its presence abroad is part of Fast Retailing founder Tadashi Yanai’s push to “become a true global player”, by first doubling annual profit to five trillion yen within a few years.

This is set to include about 700 billion yen from GU, Mr Okazaki said. The brand has already made an initial foray into North America, opening its first pop-up store in New York City’s SoHo district in 2022.

“We want to make GU a store that’s overflowing with trendy products that are easily affordable, and that makes people feel like they want to enjoy fashion,” Mr Okazaki said. “To achieve this, we can’t just stay within Japan.”

That is the big hurdle, according to Mr Dairo Murata, senior analyst at JPMorgan Securities Japan.

“Compared with Uniqlo, which sells the ultimate everyday wear to a wide age group, GU’s market will be limited by definition because it sells fashion to those aged 10 to 30,” Mr Murata said.

“To reach its midterm goal of reaching one trillion yen in GU sales, it will have to break into overseas markets, which won’t be easy.”

There is a synergy between GU and Uniqlo that makes it easier to open GU stores by leveraging what Fast Retailing has already done with Uniqlo, according to Mr Okazaki. The company will make sure to cater to international preferences, while seeking to avoid an increase in the number of product types they sell, he said.

“If this was 10 years ago, we couldn’t do this, but people’s information and the trends of clothes are becoming quite shared internationally,” Mr Okazaki said.

“Sometimes, we have to add a certain thing, but for the most part, we control the overall number of products and make them globally applicable.”

Western competitors that are already well established, such as H&M, Zara and Gap, also present an obstacle.

The H&M Group has more than 2,500 stores across the Nordic countries and Europe and more than 700 in North and South America through its various brands.

So far, the efforts to expand outside Japan and Asia are paying off, with sales in the United States and Europe helping to deliver stronger-than-projected operating profit in the first fiscal quarter, which ended in November.

Fast Retailing is planning on accelerating the opening of new Uniqlo stores to 20 in North America and 10 in Europe each year, according to its fiscal year-end report.

“Globally, the places that have leadership in fashion are, of course, Europe and America,” Mr Okazaki said.

So far, the overseas push has delighted investors, with the shares outperforming 10 other clothing companies worldwide with a market value of more than US$10 billion (S$13.4 billion) over the past year, according to data compiled by Bloomberg.

The stock has already gained more than 20 per cent in 2024.

Uniqlo has only about 0.5 per cent market share in the US and Europe, according to Mr Okazaki.

Although international sales made up more than half of Uniqlo’s revenue in the latest fiscal year, GU has mostly flourished only domestically.

Even with its popularity in Japan, GU’s annual sales amounted to just 295 billion yen, compared with Uniqlo’s 2.33 trillion yen from more than 2,400 stores across the globe.

Fast Retailing is not giving up on ambitions in China either, where it already has more than 900 stores.

Despite the country’s gloomy economy, Mr Okazaki said the apparel retailer is still bullish on the region over the medium to long term, and is now focusing on investing in the quality of stores, rather than boosting the quantity.

“In the future, I see Uniqlo and GU creating a large market together of clothes made for all people,” Mr Okazaki said.

“We intend to aggressively make the necessary investments over the next few years to make GU big.” BLOOMBERG