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Muji USA files for Chapter 11 bankruptcy protection
14 Jul '20
2 min read
Pic: MUJI Santa Anita
The US arm of Japanese home goods chain Muji, owned by Ryohin Keikaku, recently filed for bankruptcy protection, after being unable to face the impact of the COVID-19 pandemic that forced it to close stores while it continued to pay high rents for its retail locations. Muji USA listed a debt of $64 million at the time of its Chapter 11 protection filing.
The US unit will produce a restructuring plan within 180 days, which will include store closings, according to Japanese media reports. said Ryohin Keikaku President Satoru Matsuzaki.
The origin of Muji's problems reportedly dates back to its ambitious plans to expand in the United States despite the costs. Muji was launched there in 2006, but had only 19 stores as of last year, whereas in China, which it entered in 2005, it has 273 stores, nearly half of its outlets outside Japan.
Although Muji’s US sales grew, they were never able to overcome the high rent, ultimately resulting in losses.
Last year, Ryohin Keikaku crafted a restructuring plan focussed on lowering lease payments, but was unable to reach agreements in negotiations with landlords.
Muji suspended operations at all US stores from mid-March. Ten outlets have reopened, but the total operating revenue has tumbled to 80 per cent compared with the pre-pandemic figures.
The US unit will produce a restructuring plan within 180 days, which will include store closings, according to Japanese media reports. said Ryohin Keikaku President Satoru Matsuzaki.
The origin of Muji's problems reportedly dates back to its ambitious plans to expand in the United States despite the costs. Muji was launched there in 2006, but had only 19 stores as of last year, whereas in China, which it entered in 2005, it has 273 stores, nearly half of its outlets outside Japan.
Although Muji’s US sales grew, they were never able to overcome the high rent, ultimately resulting in losses.
Last year, Ryohin Keikaku crafted a restructuring plan focussed on lowering lease payments, but was unable to reach agreements in negotiations with landlords.
Muji suspended operations at all US stores from mid-March. Ten outlets have reopened, but the total operating revenue has tumbled to 80 per cent compared with the pre-pandemic figures.
Fibre2Fashion News Desk (DS)
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