Uniqlo is to fashion what 7-Eleven is to convenience stores: style that’s just around the corner. Short for “unique clothing,” Uniqlo is reportedly the third-largest global apparel manufacturer, behind ZARA and H&M’s parent companies. But don’t let their simple aesthetic fool you — they’re on the path to world (fashion) domination.

Dressed to conquer (the world)… And it starts in the US, a market Uniqlo has struggled to expand into for the past two decades. Since launching their first US store in 2005, Uniqlo has only 74 stores in the region compared to H&M’s 500+. With a better understanding of American tastes, they’re trying again — targeting 200 US stores by 2027. And it’s already showing results.

• Last week, Uniqlo’s parent company, Fast RetailingFRCOY
  , reported a 19.4% increase in Uniqlo’s international business — compared to a 10.4% growth in their consolidated business.
• Shares of Fast Retailing are up ~11% — outstripping fast-fashion competition like ZARAIDEXY
  , H&MHNNMY
  , and The GapGPS
  .

Fast Retailing’s China Slowdown

Like many other retailers, Uniqlo is struggling in China, which accounts for 27% of Fast Retailing’s operating profit and has the largest number of Uniqlo stores outside Japan. In its latest quarter, sales and earnings fell in China due to weak consumer spending, unseasonal weather, and the rise of cheaper alternatives. Still, Uniqlo’s Pan Ning views Mainland China as a “growth pillar” and aims for $6.3B in sales by 2028. But if that doesn’t work out, Fast Retailing has a fallback plan: GU.

• According to CFO Takeshi Okazaki, Uniqlo’s sister brand GU “has the same potential” — and plans to open 1K stores for GU abroad by 2026.
• While GU still makes up just 11% of Fast Retailing’s revenue, Bloomberg analysts say GU “could become a second growth engine.”

Fashion showdown: Fast-fashion companies face fierce competition from Chinese competitors, such as Shein, who Uniqlo knows all too well. Earlier this year, Uniqlo sued Shein for selling dupes of its TikTok-famous viral shoulder bag. While Shein has seen tremendous growth in recent years, it also has the attention of US regulators for its alleged forced labor ties — leading Shein to pursue an IPO in London instead of the US. That’s one less thing for Uniqlo to worry about.