Fast Retailing Bids for Barney's

With all the talk (and it's still mostly talk) of foreign firms buying Japanese ones, it's useful to remember there are still Japanese companies taking over foreign firms.

Fast Retailing is a Japanese clothing store chain with over 780 shops. Its attempts at opening stores outside Japan have been less than successful, however -- only 30 of its units are overseas, and it's Uniqlo brand name is largely unrecognized outside Japan.

In 2006 it attempted to open a Uniqlo store in NY, but sales were disappointing. Last week, in another move to establish itself in the US, the Company bid $900 million for Barney's of New York, a 34-unit chain that is part of Jones Apparel Group. Barney's was already slated to be sold to Istithmar, a Dubai group, for $825 million.

Jones Apparel had already accepted Istithmar's offer, but the firm has until July 22 to consider other bids (although it would incur a breach of contract fee of around $21 million if it were to accept one).

The offer follows other purchases of overseas assets by Fast Retailing in the past few years:

First was the acquisition in February 2006 of the French lingerie brand Princesse Tam-Tam, then four months later Fast Retailing bought Comptoir Des Cotonniers, the chic French womenswear chain that has outlets sprinkled across London. These joined Theory, the clothing line known for its stylish jersey pieces, and the fashion label Helmut Lang, which Fast Retailing snapped up in 2003. It also owns an Italian tailor, Aspesi.

The Barney's purchase offers new avenues for the firm. According to Forbes:

Buying Barneys would provide Fast Retailing with a stepping stone for the low-priced retail chain to climb up to the high-fashion market. It would also provide it with a solidly performing brand name at a time when a number of other acquisitions it has made are struggling.

Nevertheless, whether this proliferation of brands makes sense is open to question. Motley Fool's Nathan Parmalee gives his opinion in a good article on the company:

I'm not a fan of retail companies that view themselves as a portfolio of brands. Gradual extensions of a brand can make sense, but when companies begin piling on brands, it rarely works out well. With every new brand added to the business, I wonder how Fast Retailing will focus and grow any of them meaningfully without materially increasing its cost structure.