H&M vs. Zara vs. Uniqlo: Tracking their growth in India during FY24

While Indian apparel brands like Rare Rabbit are making inroads into the Indian middle-class wardrobe, a significant portion of millennials and middle-class consumers continue to prefer global fashion brands such as Zara, H&M, and Uniqlo. The growth of these international brands is the result of rising disposable incomes, rapid urbanization, and an increasing demand for evolving fashion trends.

According to the McKinsey Fashion Growth Forecasts 2025, retail sales of luxury brands in India is poised to outnumber the US, Europe and China in terms of growth. The report highlights that luxury brands in the country will rise by 15-20% year-on-year in 2025, faster than the US (3-5%), Europe (1-3%), and China (0 to -3%).

Uniqlo has recorded higher year-on-year growth compared to Zara and H&M in India. However, the Japanese brand has been in the country for only five years, whereas the other two (Zara - 2009 and H&M - 2015) have been operating in the Indian market for a much longer period.

To learn the growth of these three global brands, Entrackr has dived deep into their annual financial results for the last fiscal year (FY24).

Hennes & Mauritz India (H&M) led the pack with Rs 3,278 crore in revenue for FY24, registering an 11.4% YoY growth from Rs 2,942 crore in FY23. The brand's entire revenue came from apparel, accessories, and footwear sales. Currently, it operates 64 stores across India.

Its competitor, Zara, secured the second spot with Rs 2,769 crore in revenue for FY24, reflecting an 8.4% increase from Rs 2,554 crore in FY23. Like H&M, Zara generates revenue from apparel, accessories, and footwear sales and currently operates 21 stores across India.

Uniqlo entered the Indian market after launching its first store in Delhi in 2019. The brand recorded Rs 815 crore in revenue for FY24, marking a 31% YoY growth from FY23. It currently operates 15 stores across India.

In terms of expense distribution, procurement costs accounted for 42.2% of H&M's total expenses, 70% for Zara, and 55.2% for Uniqlo. Meanwhile, employee benefit expenses stood at Rs 150 crore for H&M, Rs 81 crore for Zara, and Rs 82 crore for Uniqlo.

Click here for the detailed expense breakup- Zara/H&M/Uniqlo

Ultimately, Zara reported a profit of Rs 244 crore, while H&M and Uniqlo recorded profits of Rs 7 crore and Rs 85 crore, respectively. Notably, their expenses towards support fees and royalties to parent entities stood at Rs 190 crore for Zara, Rs 865 crore for H&M, and Rs 27 crore for Uniqlo.

Notably, the average revenue per store for H&M, Zara, and Uniqlo stood at Rs 51.2 crore, Rs 54.3 crore, and Rs 131.9 crore, respectively.

The sales per store numbers are a close reflection of perception around these stores, with Zara and Uniqlo clearly a bit more premium, but generating lower same store sales. However the ‘mature’ growth rates for Zara and H&M are a warning sign for Uniqlo as well, in terms of the market potential ahead for it as it increases the number of stores. Zara’s far higher profits and margins are a testimony to the strong loyalty and brand salience it enjoys, with Uniqlo has turned in an equally strong performance. H&M is quite frankly placed in a far more fragile position in terms of margins as well as perception, where homegrown brands like Zudio could attract many of its buyers. It is a safe prediction to say FY25 will see some of these strengths and weaknesses play out, and we remain convinced that Zara and Uniqlo will continue to open up a gap on margins, while closing the same on sales with H&M, unless the latter cracks a new growth phase with sharper differentiation.