On July 10, Ryohin Plan, the parent company of Japanese retail giant Muji, announced that its U.S. subsidiary had filed for bankruptcy with debts of US$64 million due to the impact of the COVID-19 epidemic. Since March 17 Since then, all stores in the United States have been forced to suspend operations, and the U.S. business has continued to suffer losses.
▲Related Statement of Good Product Project
According to the announcement issued by the Ryohin Project on its official website, Muji’s U.S. subsidiary has taken measures to expand its customer base and negotiate rent to improve its business during the epidemic. However, due to the continued expansion of the epidemic and store closures, etc. Sales 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 Ryohin Project 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 through international markets including China 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, Brooks Brothers, a time-honored American clothing brand with a history of 200 years, filed 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. </p
