Muji’s US business files for bankruptcy protection, hurt by coronavirus crisis

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TOKYO • The United States subsidiary of Japanese retailer Muji, known for its minimalist lifestyle brand, has filed for Chapter 11 , adding to a growing list of corporate casualties from the pandemic.

Its Japanese parent Ryohin Keikaku said yesterday that Muji aims to close unprofitable stores and renegotiate rents in the US, where its 18 stores have been closed since mid-March due to the pandemic.

But the company had also been grappling with losses due to high rent and other costs, and was taking steps to improve sales and renegotiate rent before the pandemic hit, it said.

The virus outbreak has inflicted widespread financial pain on global retailers leading many, such as J Crew Group and Brooks Brothers, to file for bankruptcy protection.

Ryohin Keikaku said the US filing will not affect its operations in other markets.

But the has also been hit by store closures and weak consumer spending in its main market, Japan. Same-store sales for Muji outlets in Japan fell by about half during a state of emergency in the country during April and May.

Muji’s US unit joins more than 110 companies that have declared bankruptcy in the US this year and blamed the coronavirus in part for their demise.

In the latest fiscal year, sales from US operations made up about 2.5 per cent of Ryohin Keikaku’s revenue. The US business has been operating at a loss for the past three fiscal years. Last year, it had a loss of around US$10 million (S$13.95 million), according to the statement.

Despite growing rapidly in the past decade through international expansion focused on China, Muji has recently hit some bumps. For one, its minimalistic and simple products are easy to knock off, prompting a slew of cheaper copy cats that have dented sales.

Separately, yesterday, Ryohin Keikaku reported an operating loss of 2.9 billion yen (S$37.8 million) for the quarter through May.

In the latest fiscal year, sales from US operations made up about 2.5 per cent of Ryohin Keikaku’s revenue. The US business has been operating at a loss for the past three fiscal years. Last year, it had a loss of around US$10 million (S$13.95 million), according to the statement.

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