Fast Retailing, the Japanese parent company of Uniqlo, is on track to surpass Sweden’s H&M in annual revenue for the first time, driven by strong sales growth in the United States and Europe. The company reported a 16.6% increase in revenue to ¥3.96 trillion ($25 billion) for the fiscal year ending August 31, outpacing analysts’ projections for H&M, which is expected to record revenues of approximately $22.2 billion for its fiscal year ending next month.

This milestone marks a significant development in the fast-fashion sector, underscoring Uniqlo’s growing prominence in the global market. Fast Retailing aims to overtake Inditex, the owner of Zara, to become the largest mass-market casual fashion retailer worldwide. Tadashi Yanai, founder of Fast Retailing, described this pursuit as entering a new phase amid the company’s expanding footprint.

Uniqlo’s success has been attributed to its focus on minimalist, well-designed essentials such as fleeces, socks, and thermals, which have resonated with consumers shifting toward seasonless and versatile apparel. Daisuke Tsukagoshi, Uniqlo’s president, highlighted the importance of adapting to climate change and evolving consumer preferences by expanding “seasonless” clothing lines, moving away from the traditional four-season product cycle.

Established in 1984, Uniqlo stands out as a Japanese brand that effectively globalized its business model after the country’s economic challenges in the early 1990s. Its strategy includes manufacturing simple, affordable garments using advanced fabrics at scale, primarily sold through physical retail locations.

While Fast Retailing benchmarks itself against brands with integrated design-to-sales business models, excluding ecommerce platforms such as Shein, discounters, sportswear companies, and luxury brands, industry observers note that overtaking H&M in revenue demonstrates both Uniqlo’s robust business approach and the difficulties currently faced by H&M. Achim Berg, founder of the retail sector analysis group FashionSights, acknowledged this progress but cautioned that Fast Retailing still has further ground to cover to meet Yanai’s goal of becoming the world’s largest fashion retailer.

The broader fast-fashion sector faces challenges. For instance, Shein recently reported sharp profit declines linked to the Iran conflict and increased import duties, impacting its supply chain and costs.

Fast Retailing’s sustained growth has been noteworthy, with double-digit revenue increases averaging over the past 15 years. This fiscal year marked the company’s largest revenue gain since 2023, supported by new store openings and popular product releases. Net profit reached a record ¥542 billion ($3.4 billion), exceeding its ¥500 billion forecast and reflecting a 25% year-over-year increase.

The company also raised its dividend forecast for the 2026 fiscal year by one-third to ¥850 per share. It projects continued momentum with a 12% rise in revenue to ¥4.45 trillion and net profit of ¥560 billion in the upcoming fiscal year. International sales contributed significantly, climbing more than 25% driven by expansion into smaller European cities and shopping centers across the United States.