Uniqlo will become profitable in India in less than three years of operation
The Japanese brand reported a £21.4 million net profit for 2021-22, compared to a £36.1 million loss last year, according to business intelligence firm AltInfo. Revenue grew 63% year over year to ₹391.7 billion through March 2022, a slower pace compared to FY21 when the company reported 86% revenue growth from a low base.
Experts believe that Uniqlo’s strategy of pricing its goods at least 20% higher than rivals Zara and H&M has helped it generate better margins despite inflationary pressures in commodities.
“The market isn’t easy, and becoming profitable at a time when most competitors are spending aggressively is a good indication of success. As an international brand, they (Uniqlo) can get good locations and are preferred tenants, which helps generate revenue, especially in top cities,” said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm. “However, the pricing is a bit high , and until they are able to shop locally, selling product at a reasonable price to the market will remain a challenge.”
The Japanese brand opened its first door in the country in September 2019, but strict lockdown measures announced in March 2020 to contain the Covid-19 outbreak delayed its store expansion plans and limited the number of stores to around seven stores so far.
According to Uniqlo, India is one of the key markets where consumers are increasingly shifting from “fast fashion” to durable essentials and functional clothing. “India is an important and very important market,” Tomohiko Sei, CEO of Uniqlo India, told ET in June.