H&M Lobs in Japan's Dress Circle

Hennes & Mauritz AB, Europe's second-biggest clothes retailer, will consider opening more stores in Japan or making acquisitions, Chief Executive Officer Rolf Eriksen said Thursday.

"I'd like to think about mergers and acquisitions in Japan if we get opportunities," the 63-year-old CEO said in Tokyo.

The Stockholm-based company planned to open its first Japanese store tomorrow (Friday) in Tokyo's Ginza shopping district.

Another store was planned for the city's Harajuku area in November, and the retailer has signed a contract to open a flagship store in the Shibuya district next year.

H&M was entering Japan as Fast Retailing Co, the country's biggest garment seller, planned to expand elsewhere. The nation is on the edge of recession as exports fall and consumer spending ebbs. Still, H&M said it hoped the US$108 billion market could become a center of growth for the company.

"In Japan we are new and opening only three stores, so we aren't so dependent" on the state of the economy, Eriksen said, adding the company could expand its presence depending on how the first stores fared.

"We're not in a hurry in Japan but we can see a huge potential if we succeed. We'll go step by step," said the CEO, who plans to step down a year from now upon turning 65.

In addition to the three stores already planned, the company was in talks to add more shops in 2009, spokeswoman Kristina Stenvinkel said.

The retailer has named Japanese designer Rei Kawakubo, founder of the Comme des Garcons fashion chain, to create a limited-edition clothes range following similar collaborations with the likes of Karl Lagerfeld.

The collection would be introduced when the second Tokyo store opened at the beginning of November, H&M said in April.

Larger competitor, Inditex SA, already has about 30 Japanese outlets in its Zara chain. The retailers have faced off around the world in places including New York, where Zara was opening a shop on the northwest corner of the intersection of Fifth Avenue and 42nd Street, opposite an H&M outlet on the northeast corner.

Fast Retailing planned to speed up openings of Chinese and Korean stores in its Uniqlo garment chain and may expand the brand into Russia and India. It has aimed for the Chinese mainland and Hong Kong to overtake Japan as its main market by 2017.

Japan's clothing and footwear market shrank 7.6 percent between 2001 and 2006, according to estimates by researcher Euromonitor International. Sales jumped 89 percent in China and swelled 13 percent in the United States, its figures show.

H&M, which charges as little as 4.90 euros (US$6.90) for children's T-shirts, and other retailers based in western Europe were expanding outside the region.

The company's first store in Russia, where energy exports were driving a 10th straight year of economic expansion, was scheduled to open next year.

China's garment and shoe market was worth US$119.8 billion, compared with US$263 billion for the US, Euromonitor said. It estimated the total global market's value at US$903.3 billion.