MUJI Files For Bankruptcy In The US After Suffering Hit From Coronavirus
Image via JHVEPhoto / Shutterstock.com
Fan-favorite lifestyle goods company MUJI is yet another victim of COVID-19, with the US arm filing for bankruptcy protection on Friday after prime locations grappling with expensive rents were forced to halt operations during the outbreak.
The Japan-based homeware giant, beloved globally for its simple “brandless” products from anonymous designers, declared a total debt of US$64 million during its registration for Chapter 11 protection. Moving forward, MUJI USA intends to introduce a restructuring model within 180 days, which will also include the shutdown of some stores, the Nikkei Asian Review reported.
Satoru Matsuzaki, president of MUJI’s parent company Ryohin Keikaku, concluded, “Everything starts from here. I will personally realize the restructure in the US.”
MUJI USA had long fought to stay afloat financially—the pandemic was only the straw that broke the camel’s back. Ryohin Keikaku had envisioned opening MUJI’s US stores in prime locations like Times Square and Fifth Avenue in New York City as a key strategy to the brand’s global expansion, taking on their exorbitant rents to plant seeds for a larger blossoming picture. Matsuzaki explained, “The US is the cornerstone in building name recognition.”
While MUJI managed to capture the adoration of US shoppers, the sales were never enough to overcome its rent, and its operating losses snowballed over time. According to Nikkei, Ryohin Keikaku had hoped to soften the blow last year by making negotiations for lower lease payments with landlords, but was “entirely unable to reach agreements in negotiations with landlords,” the company’s president related.
MUJI temporarily closed all US stores from mid-March due to the coronavirus outbreak, and even though 10 of them have reopened, “the customers aren’t coming,” Matsuzaki shared. Furthermore, the rise of COVID-19 cases in the US forebodes that MUJI might have to close its locations again.
The unpredictability of the pandemic eventually forced Ryohin Keikaku to file for bankruptcy in the country.
As part of its restructuring plan, MUJI USA will first negotiate rent payments, before closing outlets where expectations for improved sales are bleak.
A message about our restructuring. #muji #mujiusa pic.twitter.com/nYfjie1KX7
— MUJI USA (@mujiusa) July 10, 2020
[via Nikkei Asian Review, cover image via JHVEPhoto / Shutterstock.com]
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