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Uniqlo is Climbing The Fast-Fashion Ladder, One International Store at a Time

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 Retailing ($FRCOY), 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 Zara ($IDEXY), H&M ($HNNMY), and The Gap ($GPS).

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.

PARTNERED WITH PRAIRIE OPERATING COMPANY

New Study Reveals Dramatic Story

The American Petroleum Institute-Colorado recently released a new analysis on the growing economic contributions of America’s natural gas and oil industry. The report shows that the industry supports more than 303K jobs and contributed over $48B toward the state’s economy.

These figures are staggering and underscore the critical importance of Colorado’s natural gas and oil industry to the state’s broader economic health. According to the findings, the industry directly and indirectly:

• Supported 303,730 total jobs (54,420 direct and 249,320 indirect) or 7.7% of Colorado’s total employment.

• Provided $34.1B in labor income ($15.4B direct and $18.7B indirect) to Colorado, 12% percent of the state’s total.

• Contributed $48.7B to Colorado’s total gross domestic product ($19.8B direct and $28.9B indirect), 11.2% of the state’s total.

Click here for more information on the economic impact Colorado can have on the success of your investment portfolio.

LARGECAP RECAP

🤏 Small-Cap Companies Show Signs of Life On Rate Cut Rumors, Large-Cap Worries

Since October, American large-caps have been the only game in town for investors — with the Magnificent 7 stocks driving most of the S&P 500’s gains this year. But with concerns about the sustainability of these top-heavy trades, Wall Street is turning back to stocks that were ignored since the waning days of the pandemic.

• With interest rate cuts expected later this year, investors are revisiting small-cap stocks. The Russell 2000, which tracks the 2K smallest US companies, has risen by 4.5% over the past month.

• According to Institutional Investor, small-cap companies have historically outperformed large-cap companies over the long run, sparking investor excitement for a comeback.

No small matter: Small-caps fell from grace after the Fed hinted at interest rate hikes in 2022. Rates have since risen from near-zero to over 5%. But after Thursday’s inflation report, analysts widely expect rates to start falling later this year, helping rate-sensitive names attract bids. Still, they face an uphill battle — analysts say that many quality small-caps were acquired, leaving the Russell 2000 with a high price-to-earnings ratio but weaker profitability. Firms can only hope that rate cuts deliver the financial peace they’ve been waiting for.

How can you protect your retirement savings from a crash? By using this simple strategy that’s been called the “The holy grail of investing” and “The only free lunch in finance.” In the free report titled “Meltdown 2024,” you can learn how this strategy can protect your retirement savings from recession, inflation & stock market crashes. Get your free copy here.*

Markets & Economy

USPS raises stamp prices: Yesterday, First-Class stamp prices rose by a record five cents to 73 cents, the second hike this year and the fifth in 24 months. This increase comes as snail mail volume declines. [Read]

Women to inherit trillions: Up to $9T is expected to be passed to spouses and partners in the coming years as part of the “horizontal wealth transfer.” Masculine-focused luxury brands are adapting to capture this wave of feminine wealth. [Read]

FTC scrutinizes oil merger: The Federal Trade Commission is seeking more information on ConocoPhillips’ ($COP) $17B acquisition of Marathon Oil ($MRO), signaling closer antitrust scrutiny in energy sector consolidation. [Read]

Business & Wealth

AT&T reports massive data breach: Hackers stole six months of call and text records from nearly all AT&T ($T) cellular customers, potentially exposing sensitive metadata of millions of Americans. The Justice Department and FBI are now investigating the hack. [Read]

NYC food delivery fees surge: New Yorkers are paying 58% more in delivery fees since a minimum-wage law for couriers took effect in late 2023. Delivery workers' earnings rose, but contractor numbers fell by 9%. [Read]

Corn prices rise after reaching pandemic low: The USDA lifted the demand forecast for America’s most farmed crop just days after corn prices hit a nearly four-year low, indicating falling prices for Americans. [Read]

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DIGIT OF THE DAY

China’s $99B Trade Surplus Is Sparking International Worries

China’s export boom is setting off fireworks, and economies worldwide hope they don’t catch fire. In June, China exported $99B more in goods than it imported. This record trade surplus was driven by foreign companies rushing to buy before new US and European Union (EU) tariffs take effect next month, impacting products like electric vehicles and household appliances.

• In June, Chinese exports surged 8.6% from the same time last year, the fastest growth in 15 months — while imports fell by 2.3% from a year earlier due to weak domestic demand.

• China’s trade surplus with the US and the EU grew to $32B and $22.6B, respectively.

The straw that broke the camel’s back: China’s economic resurgence requires a return to its roots — producing and exporting manufactured goods. However, with the EU, US, and India raising tariffs on these goods, economists predict a slowdown in China’s economic growth in the second quarter — compounding the headwinds affecting the world’s second most-populated country.