Closing 500 stores and killing the unprofitable brands (2015)

Choosing to stop chasing sales

The heart of this decision is that it was not an emergency response to imminent financial collapse, but an outside executive taking direct aim at a management style that had made the accumulation of sales an end in itself. A way of competing that held many brands and many stores and fought on scale was thinning out profit as fast fashion rose. That Ueyama declared he would not chase sales unaccompanied by profit, closed 400 to 500 stores including profitable ones, and folded up unprofitable brands can be read as an attempt to rethink that way of competing itself. Behind the willingness to step into painful contraction lies the fact that a president outside the founding line carried less deference towards the expansion of the past.

Closing stores and brands, however, also means letting go of customers and selling space built up over years. Contraction does not by itself promise the next phase of growth, and which businesses would grow the lightened company remained an open question. World would go on from here to an operating-holding-company structure and into new fields such as digital and investment. Not size, but how to choose the businesses that generate profit — Ueyama’s restructuring is best placed as the decision that dragged that question back to the centre of management, at the moment in the mid-2010s when Japan’s large apparel firms faced the ebbing of the department-store model.