Though global fast fashion brands Uniqlo, Zara and H&M clocked in more than $600 million in sales from Australia's departmental stores and local fashion chains last year but weird weather and soft Australian dollar weighed on profitability. The international apparel giants are poised to take more sales from the likes of Target and Big W this year but margins are under pressure. And sales per store rate are dropping rapidly as the shine comes off these global outfits.
The Japanese fashion label and Zara accounted for about 6 per cent of apparel sales growth based on their 2016 performance or 0.9 per cent of cumulative clothing, accessories and department store sales in Australia and that doesn't even include H&M's sales, which doesn't release its financial results until later in 2017.
2015 sales at H&M, Zara and Uniqlo totalled about $460 million, which equated to about 1.1 per cent of total clothing, accessory and department store sales in Australia over the same period according to the Australian Bureau of Statistics. Uniqlo's sales grew by 247 per cent to $174.5 million in the full year to August as it reaped the benefits of six new store openings, taking its total store numbers to 12 in Australia however its losses for the same period blew out to $5.8 million up from $3.04 million a year earlier.
But the broking house said that this was unlikely to deter new international arrivals, keen to take advantage of shopper appetite for sharply priced, on-trend apparel - a trend that is adding to the pain for Australia's iconic discount department stores Target and Big W. Macquarie identified Myer, Woolworths' Big W as well as Wesfarmers' Target as the businesses with the most to lose from any new international arrivals. However, analysts from Macquarie said that apparel specialists were also likely to find themselves between a rock and hard place as landlords brought down the space allocated to the sector and increased leases to internationals.