FAST RETAIL-DRS(US:FRCOY) Xin Lang Cai Jing·2025-08-11 00:10Core Viewpoint - GU, the sister brand of Uniqlo, is closing its first store in China located on Shanghai's Huaihai Road, raising concerns about its future in the Chinese market [1][2][6]. Store Closures - The GU flagship store on Huaihai Road will officially close on August 24, 2025, following the announcement of a clearance sale [2][4]. - The Guangzhou Victoria Plaza store, which opened in November 2019, is also set to close on August 16, 2025, marking GU's only store in South China [2][6]. - Following these closures, GU will only have two remaining stores in Shenzhen, leading to speculation about a potential exit from the mainland Chinese market [1][6]. Company Response - GU has confirmed the closures but stated that it is not exiting the Chinese market, instead optimizing its operational layout [1][7]. - The company has opened a new store in Shenzhen and continues to operate its online store on Tmall [7]. Financial Performance - GU's revenue for the first three quarters of the fiscal year increased by 4.0% to 256.2 billion yen, but operating profit fell by 10.7% to 26.3 billion yen [8][10]. - The decline in profit is attributed to insufficient inventory and marketing for certain products, alongside rising costs due to a weak yen and increased operational expenses [8][10]. Market Context - Since its entry into the Chinese market in 2013, GU aimed to expand to 50 stores within 3 to 5 years, but has faced significant challenges, leading to a reduction in its store count from 14 in 2019 to just two remaining [6][11]. - The overall performance of GU contrasts with its parent company, Fast Retailing, which reported a 10.6% increase in total revenue for the same period [10].