Uniqlo parent reports full-year profit drop
Tokyo — Fast Retailing Co., parent to the Uniqlo chain of stores, reported Wednesday that profit for the full year fell 12% to $709.2 million. The company blamed the performance decline on bad weather, but said it will accelerate store openings overseas, which will compensate for the decline.
On Friday, Fast Retailing will open it largest store to date – on New York City’s 34th Street at Fifth Avenue. Earlier, in September, the company unveiled plans to open 200 to 300 stores per year to make it the world’s biggest apparel retailer. It will launch a joint venture with SM Retail to operate its Uniqlo chain in the Philippines.
Same-store sales for the fiscal year dipped 6%, and revenue edged up 0.7%.
TRU wish list program to help support Make-A-Wish Foundation
WAYNE, N.J. — Toys"R"Us announced that through Nov. 5, for every wish list created in-store or online it will donate $1 in Toys"R"Us gift card, up to $50,000 to the Make-A-Wish Foundation. In addition, the Toys"R"Us Children’s Fund, a public charity affiliated with Toys"R"Us Inc., has provided the Make-A-Wish Foundation with a $275,000 grant.
Creating a Wish List is always a fun way for parents and kids to begin the holiday season, but this year, the simple act of creating their list can help make dreams come true for some very special kids through the Make-A-Wish Foundation," said Greg Ahearn, chief marketing officer, Toys"R"Us U.S. "In conjunction with this initiative, we’re introducing some great new tools to make sharing, updating and viewing wish lists more convenient wherever, however and whenever our customers choose to do so."
That’s a Stretch
In past columns, I have talked about restaurant group think and the tendency of dining concepts to overfill a niche. I’m becoming concerned that athletic apparel is in danger of the same thing. We now have three big players in this space: Lululemon, Lucy, and, more recently, Gap’s new Athleta concept. It seems that each has successfully carved out a lucrative niche in the world of contemporary athletic apparel, but it feels to me like it may be the latest retail “trend-du-jour.”
Because it is such a narrow category, it would seem to be even more susceptible to becoming overstored quickly. Among the three main players, there is already some significant overlap. Lucy activewear has more than 60 stores in 16 states. Lululemon is growing fast, with a total of 151 locations worldwide and an average of 40 new stores per year. Athleta, the newest member of the club, only has a handful of locations thus far, but may see the potential for growth very soon. I think there is room for all three IF they differentiate themselves and define their brands within the marketplace.
While it may be the priciest brand, Lululemon, has consistently been able to translate great value to justify their higher prices. The fact that they cater to both women and men already distinguishes them from their competition, who focus exclusively on women’s wear. The folks at lulu have done a great job marrying yoga and fitness experiences with their apparel, selecting real estate that allows them access to outdoor spaces where they can host sponsored classes. Through their wholesale division, they also sell their apparel inside yoga studios and fitness centers, which isn’t something their competition is doing — yet.
I think that Lucy would benefit from less head-to-head competition with Lululemon by establishing themselves as the “Chico’s of athletic apparel” and focusing on a more mature demographic. Lucy’s parent company, VF Corporation, has always been good at marrying wholesale and retail, which I’ve heard they may do with Lucy. If that’s the case, there would be a clear space in this niche for Lucy going forward.
Like Lucy, Athleta occupies a slightly lower price point than Lululemon, but if you think about the challenges and changes surrounding brand and site consolidation with Gap, you might wonder–as I do–if Gap is capable of giving Athleta the kind of consistent and focused support the brand needs to make inroads into such a competitive space. The Athleta pitch is a combination of performance and style, but will it work? Given the competition, I am inclined to think that is not an approach that will bear fruit. I think Athleta would be more successful honing in on a younger, hipper market at a lower price point as a way to distinguish themselves from the competition.
Part of the appeal of this category of clothing is its everyday “wearability.” Advances in fabric technology and a new appreciation for styling have helped blend comfort and performance with fashion, making the product more versatile than your average workout clothing. Both Lucy and Lululemon are very fashion-oriented, but I think it remains to be seen if the Athleta merchandise can compete on the same level. I think it’ll be interesting to see how things “work out.”
What do you think? Is athletic apparel the next “trend-du-jour?” Is there room for more players? Please make a public comment below or feel free to e-mail me privately at [email protected].
Jeff Green is president and CEO of Phoenix-based Jeff Green Partners (jeffgreenpartners.com), a leading consulting firm specializing in retail real estate feasibility, retail expansion planning, medical retail planning, location analysis and commercial land use.
Click here for past columns by Jeff Green.