Muji enters Chapter 11 owing US$65 million in USA
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Japanese homewares and lifestyle retailer Muji has placed its US business in Chapter 11 bankruptcy protection with debts of US$64 million.
The company said the measure was the result of having to continue to pay rent in high-profile locations while stores were shuttered due to the Covid-19 pandemic. Landlords had shown little flexibility despite stores not being able to trade.
Under bankruptcy protection, the company’s parent, Ryohin Keikaku, has six months to submit a restructuring plan.
After launching in 2006, Muji US has opened just 19 stores there. But it chose high-profile locations like 5th Avenue and Times Square to establish brand exposure.
In the year to February, the company achieved sales of $102.5 million but reported a loss of $16.8 million.
Muji has no intention of closing or exiting the US. Ryohin Keikaku, president Satoru Matsuzaki, said he would personally oversee the restructuring of the US business.
“The US is the cornerstone in building name recognition,” Matsuzaki was quoted in the Nikkei.
Muji US has reopened 10 stores, but total sales are running at just 20 percent of the level of pre-Covid-19.
Questions & Answers
Q.What is the main reason Muji's US business filed for Chapter 11 bankruptcy protection?
What is the main reason Muji's US business filed for Chapter 11 bankruptcy protection?
Muji stated the measure was necessary because it continued to pay rent for stores in high-profile locations even though they were closed due to the Covid-19 pandemic. Landlords reportedly offered little flexibility on rent.
Q.How many stores does Muji operate in the US and what was their financial performance last year?
How many stores does Muji operate in the US and what was their financial performance last year?
Muji US has 19 stores, with 10 currently reopened. In the year to February, the company recorded sales of $102.5 million but reported a loss of $16.8 million.
Q.What is the parent company's long-term strategy for Muji's presence in the US market?
What is the parent company's long-term strategy for Muji's presence in the US market?
Muji has no intention of closing or exiting the US market, with its parent company viewing the US as a cornerstone for building brand recognition. The president will personally oversee the restructuring efforts.
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