Online sales of casual clothes boosts Japanese department store Uniqlo through Covid lockdown

Rent relief and more than $4m in JobKeeper payments helped bolster earnings at Uniqlo.

Michelle McNamee, 27, and Chelsea Cunningham, 23, at Brisbane's first Uniqlo store in Indooroopilly Shopping Centre. Pics Tara Croser.

Japanese department store Uniqlo maintained strong sales through the worst of Covid-19 in Australia thanks to a shift to online shopping and heightened popularity for casual clothes as consumers worked from home, while rent relief and more than $4m in JobKeeper payments helped bolster earnings.

The latest accounts for Uniqlo, which has 25 stores across Australia, show revenue for 2020 dipped slightly to $299.77m from $306.17m in 2019 despite the massive upheaval and impact caused by the pandemic, which saw stores closed and millions of consumers locked down in their homes.

Uniqlo’s delivery of just a small dip in revenue for the year ended August 31 means much of its sales momentum was kept intact as the pandemic struck and represents $300m worth of sales siphoned off from department store competitors such as Myer, David Jones and the legion of discount department stores like Big W, Kmart and Target.

Part of Japan’s Fast Retailing retail empire, Uniqlo has proved a potent competitor since first arriving in Australia in 2014 and has almost doubled its sales in the last three years. Its entry here was part of a vanguard of overseas clothing retailers setting up shop in Australia in the last decade which also included Zara and H&M.

The accounts for Uniqlo Australia lodged with ASIC reveal its bottom line results were thrown around by depreciation costs and the accounting treatment of lease liabilities, with its 2020 net profit falling to $2.96m from $11.26m in 2019.

But the company’s operations in 2020 were supported by landlords and the federal government as it, along with the rest of the retail sector, battled forced store closures and other economic ravages of the coronavirus pandemic.

Uniqlo booked “lease incentive” payments of $2m for 2020 and pocketed $4.387m in JobKeeper payments. The accounts also state that subsequent to its balance date, the parent company of Uniqlo Australia agreed not to call for repayment of all or part of the $49.7m related party loan for at least 12 months if it causes Uniqlo Australia to become insolvent.

A spokeswoman for Uniqlo Australia said COVID-19 did have an impact especially when it was required by the Victorian Government to close its stores in the state.

“However, we were able to maintain a strong performance which was greatly supported by our e-commerce sales as more customers changed their shopping habits from in-store to online. Due to the increase in demand, logistics costs therefore became proportionally higher and had some impact on our profit this year,” the spokeswoman said.

The department store did benefit from changing fashion trends generated by the mass of Australians working from home and choosing more casual clothing.

“Our product line up when various states and territories were undergoing Covid-19 restrictions also played a part, as it aligned with the customer’s needs during that period — affordable, easy care clothing suitable for working from home. A strong push in digital marketing additionally enabled us to continue to engage with existing customers and stay top of mind as well as introduce the brand to newer customers.”

The spokeswoman said Uniqlo continued to pay all of its part-time and full-time staff throughout this period including during store closures. It employs 1800 people in Australia.

“We have also added over 100 local jobs to an industry that has been hard hit by the pandemic with the recent openings of our Liverpool, Bondi and Karrinyup stores.

“With regards to JobKeeper, Uniqlo was eligible and we did receive some rent relief from our various landlords.”