Uniqlo's Casual Gambit

By Coco Masters

Only a company whose customers line up along Tokyo blocks clamoring for cheap casual chic would be comfortable predicting being "bigger than Gap." But Tadashi Yanai, CEO of parent company Fast Retailing, expects Uniqlo to reach $10 billion in sales by 2010, with 10% coming from the U.S. The haberdasher's son is introducing neighborhood concept stores--stocked with basics made with colorful Egyptian cotton and Mongolian cashmere--to three high-volume New Jersey malls, to add to Uniqlo's roughly 700 stores in Asia and Britain. Yanai talks big, but expansion failures in the London area in 2003 cut revenue 25% and the stock 80%. Uniqlo expects 2005 sales to surpass $3.5 billion, up slightly from 2004. To compete with Gap (3,000 stores; $16.3 billion in sales), Uniqlo needs to focus on differentiating itself, says A.G. Edwards & Sons analyst Bob Buchannan. In Japan, Uniqlo makes $80 million online, but Uniqlo USA CEO Nobuo Domae says it will stick to bricks in the States. "Unless the customer knows who we are by coming to the store, they won't buy the product." --By Coco Masters