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On July 10, Ryohin Plan, the parent company of Japanese retail giant Muji, announced that its U.S. subsidiary had filed for bankruptcy with liabilities of US$64 million. , the reason is that due to the impact of the new coronavirus epidemic, all stores in the United States have been forced to suspend operations since March 17, and the U.S. business continues to suffer losses.
▲Related Statement of the Good Product Plan
Issed on the official website in accordance with the Good Product Plan According to the announcement, Muji’s U.S. subsidiary has adopted methods such as expanding its customer base and negotiating rents to improve its business during the epidemic. However, due to the continued expansion of the epidemic and store closures, sales have dropped significantly.
Judging from the financial data released by the company in the past three years, Muji’s operating conditions in the United States have not been very good. Although sales have increased every year, profits have increased year by year. For example, the final loss in the fiscal year ending in February 2020 was 1.8 billion yen, and the loss in the previous fiscal year was 940 million yen.
▲The financial situation of MUJI’s U.S. subsidiary in the past three years
According to the company’s announcement as of Judging from the financial report for the first fiscal year in February 2020, overseas revenue accounted for 40% of the total, and the East Asian market, dominated by China, accounted for 30% of this, reaching 124.7 billion yen, making it the largest market outside Japan.
According to its financial report, MUJI has continued to struggle in the European and American markets in recent years, especially since 2018, it has opened new large-scale stores in the US market. Since then, MUJI began to reorganize its U.S. business, but failed to reverse its losses.
▲The financial report from March to May 2020 released by Liangpin Plan on July 10
According to reports, Muji’s U.S. subsidiary is one of more than 110 companies that have filed for bankruptcy due to the impact of the new coronavirus epidemic. The epidemic has swept retailers around the world, and filing for bankruptcy is also a way for companies to cope with it.
The report also pointed out that Muji currently has 19 stores in the United States, and total sales account for 10% of the revenue of the Liangpin plan of 2.5%, but the U.S. market has been in the red for the past three fiscal years. According to its bankruptcy declaration, the U.S. subsidiary lost about $10 million last year.
Although the MUJI brand has rapidly expanded in the international market in the past 10 years, the company’s operations have not been smooth. The report said that because Muji’s simple design style and products are easy to be imitated, a wide range of cheap textiles has also weakened its sales performance.
Under the impact of the epidemic, a wave of bankruptcies began in the United States. On July 8, the 200-year-old American clothing brand Brooks Brothers ) files for bankruptcy. According to data from legal services company Epiq Global, U.S. court records in May showed that 722 companies across the United States filed for bankruptcy protection, an increase of 48% from the same period last year. Among them are big names, including Hertz, J. Crew, J.C. Penney and Neiman Marcus.
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Brooks Brothers, the United States One of the oldest and most prestigious clothing brands also filed for bankruptcy protection with the court last Wednesday (8th).
A spokesperson for Brooks Brothers said: “Over the past year, the Brooks Brothers board of directors, leadership team and Financial and legal advisors have been evaluating various strategic options to position the company for future success, including the sale of parts of the business. During this period, the COVID-19 pandemic has caused great disruption to our business and caused significant losses.”
The retailer, founded in 1818, boasts that it has outfitted 40 U.S. presidents and countless investment bankers.
Brooks Brothers originally offered casual office wear, then became known for its crisp oxford shoes and smart blazers.
It is understood that the company’s sales last year exceeded US$991 million, of which online sales accounted for approximately 20%.
The company has wholesale agreements with retailers such as Macy’s and Nordstrom, as well as contracts for NetJets, United Airlines United Airlines and other companies to produce uniforms.
But for the company, rent was already a burden, and the arrival of the coronavirus pandemic has disrupted it even more.�The inventory is not surprising and makes sense. Management has said it will take various measures to ensure it keeps inventory flowing for the remainder of the year, while not wanting to damage the brand with continued and massive promotions. ”
These analysts also said they believe it would be a better choice for Lululemon to sell the inventory all at once rather than letting it continue to accumulate.
They say: “Historically, one-time promotional clearances have been a quick, efficient, low-risk way to get rid of excess inventory without permanently damaging brand equity. In fact, the frequency of (Lululemon’s) inventory promotions is very low and the duration is very short, so we believe that this gives customers an opportunity to “pick up missing items” and should not be equated to discounts that damage brand value. ”
Although it fell 1% in pre-market trading, Lululemon’s stock price still rose 1.7% as of Thursday’s close. to US$315.08 per share. Because the outbreak has forced people to exercise at home, Lululemon is considered by analysts to be one of the beneficiaries of the epidemic. The group’s stock price has risen by more than 30% since entering 2020 (click to view previous issues Report: lululemon’s stock price hit a record high, and sports and leisure clothing sold well during the epidemic).
In addition, Lululemon has just acquired US$500 million Acquired Mirror, a New York home fitness equipment manufacturer, at a price of 10% to comply with the home fitness trend in the “post-epidemic era”.
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