"Superficial" leads billionaire Uniqlo Fashion Astray From Roots Drucker

Tadashi Yanai, the richest man in Japan, the board of management guru Peter Drucker used to build his empire of Uniqlo clothing. To leave a depression that hammered profits and stocks, the millionaire is reviewing the lessons.

Yanai, 61, founder and president of Fast Retailing Co., built his estimated fortune of $ 9,200,000,000 over 26 years, becoming his father's tailoring in the Uniqlo chain of low-priced, casual clothes to become the largest retailer Clothing of Asia. Yanai said that his success was inspired by Drucker management strategies and the idea of "creating customers" with a product that creates demand.

This year, something went wrong with the strategy of Yanai. Fast Retailing stocks plunged 26 percent to 12.990 yen this year. Sales at stores open more than a year fell 25 percent in September to continue to slide until November, and the company forecast its first profit decline in four years for the fiscal year that ends next August.

"Fast Retailing lost focus of its core products," said Mikihiko Yamato, KK Japaninvest analyst in Tokyo. "The company bent on fashion items that did not sell well."

Uniqlo sales second half of August fell 6.4 percent in Japan, where Yamaguchi-based Fast retailing gets more than 80 percent of revenues.

Meanwhile, competitors such as Zara brand of Inditex SA of Spain and Sweden Hennes & Mauritz AB added stores. Zara had 54 points in Japan in July, after the opening of its first time in the country in 1998. H & M entered the Japanese market in 2008 and had 10 outlets in November.

Basic designs

Trying to match with Zara and H & M, may have been what led to Uniqlo off track, analysts and investors said.

"The company continued to fashion leaders such as Zara," said Yamato Japaninvest. "Uniqlo needs some fashion items, but the strength of the company is to buy fabrics to mass large numbers of functional clothing," said Yamato, who recommends buying shares of Fast Retailing.

"The company should continue its basic design to differentiate itself from Zara and H & M," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo. He refused to comment on their properties.

Yanai received the message. Fast Retailing will focus on functional designs after "surface fashion" items decreased sales, said in a press conference in Tokyo on October 8.

NHK this year published a book entitled "My Way of Management in the style of Peter," based on interviews with Yanai on the influence of management consultant.

Like a compass

"Drucker is not only my professor of management, but it's like a compass to provide a way forward," he said in the book.

Former General Electric CEO Jack Welch Co., s Intel Corp. co-founder Andrew Grove and Shoichiro Toyoda of Toyota Motor Corp. consulted with Drucker was born in Vienna, who died in 2005.

Drucker: "The Practice of Management" Yanai influence "to think first about what customers want and provide more value, instead of what a company wants to sell," said the billionaire. He refused to be interviewed for this article.

Masafumi Shoda, research director of retail industry of Nomura Securities Co., said Yanai has been down and recovered before.

Losing Vegetables

His book "to get rid of their success in a Day", 2009 edition, citing his transfer to the vegetable store in Japan in 2002 and losing money until they pulled the plug two years later. Uniqlo made in the UK in 2001 with the goal of 50 stores in three years. He got to 21 points before closing 16 in 2003 to stem losses and restructuring.

"He makes quick decisions to withdraw from a business not to prevent further losses," said Masamitsu Ohki, a fund manager at Tokyo-based Statistics Investment Management Co., which owns shares of Fast Retailing.

Yanai also worked a sales area, sales of cookware and men's clothing in a Jusco supermarket in 1971, according to his book. Jusco left in 1972 to join tailoring business from his father, Ogori Shoji. He became president in 1984, when he opened the first store Uniqlo, known at the time as the only clothing Gallery.

To his admirers, Yanai show lack of cunning, as in 2007, when he walked away from a bidding war with Dubai investment firm Istithmar PJSC for Jones Apparel Group Inc. 's Barneys New York unit.

"We were lucky not to buy Barneys, after all, as the demand for luxury financial crisis cut, Yanai said in an interview in March.

Now, the World

Although growth has failed this year, has doubled Yanai of Fast Retailing sales in the last five years and the objectives of revenue growth for six to 5 trillion yen (60 billion) in 2020 to overcome H & M and Inditex.

Yanai said he wants 4,000 stores worldwide by 2020, expansion in China, Southeast Asia and other overseas markets. Uniqlo has outlets in the U.S., Russia and France.

"Yanai should keep pursuing overseas expansion, as Japan is shrinking, and offers little growth," said Ogawa of Daiwa SB Investments.

Fast Retailing's Uniqlo will add 44 stores abroad and 36 in Japan in the 12 months to August, bringing the total to 1,024, the company said Oct. 8. That's the pace of openings as the fiscal year.

A 1200 plan includes hiring overseas candidates store manager-in the year from September 2012 to about 300 this fiscal year.

"The opening of new stores outside of Japan is important, but the training of our employees is even more important," Yanai told investors and analysts in October.

Fleece Factor

In addition to Drucker, Yanai Fast Retailing has collaboration with Toray Industries Inc., Japan's largest maker of synthetic fiber, to the shore.

The two work as a "virtual company", said President Sadayuki Sakakibara Toray. "We share information, including costs and technology."

Toray provides the web for Uniqlo fleece jackets, his first success of the product. It retails for 1,900 yen each in 1998, while similar products from manufacturers such as Patagonia Inc. were priced at $ 100, or about four times more.

Uniqlo sales of woolen goods exceeded 26 million units in 2000 and remain at the same level, the company said. The company aims to increase sales of its best-selling light clothing developed with Toray HEATTECH by 40 percent to 70 million units this fiscal year.

Toyota Teaching

Yanai attracted the attention of Toyota, as it struggled to restore customer confidence after recalling more than 8 million vehicles. the world's largest automaker invites you to discuss your manufacturing and pricing strategy at its headquarters in May.

"He knows his customers well and there are things to learn from him," said Toyota vice president Katsuaki Watanabe.

Uniqlo While customers may not be aware of the influence of Drucker visiting stores throughout Japan that are, as Yanai, read about their ideas.

A book about a high school girl who is inspired by the teachings of Drucker to help a baseball team will become the biggest seller in Japan this year.

"What if the Assistant Men of great baseball team Lee Drucker School" Management ", written by Natsumi Iwasaki, sold 1.21 million copies in the year ended November 21, ahead of" 1Q84 "Haruki Murakami and diet guide. Yanai knows the concepts and, according to Shuhei Abe, CEO of Sparx Group Co., where Yanai served as a director out of two years.

"It's one of the few executives who understand Drucker's thinking and philosophy," said Abe, whose Tokyo-based hedge fund also owns shares of Fast Retailing. "The fact implement them."