Muji in The US Filed for Bankruptcy; S’pore Outlets So Far Unaffected

By
Zhi Hao
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As the ongoing epidemic ravages the Earth in all its entirety, including its industrial sectors, one burning question has come to mind:

How do businesses keep afloat in circumstances as dire as the current state?

Granted, several trades are downright booming right now: food delivery services, face mask production companies, toilet roll manufacturers… the list goes on and on. And yet, the list of casualties still remains much more prominent than the rare few successes.

Grab.

Esprit.

And now, it seems that trendy Japanese retailer Muji has also conceded to the epidemic’s recession-causing capabilities…

Though its local outlets may yet stay.

Image: ShopinSG

Muji in The US Filed for Bankruptcy

According to New York Post, minimalist home-goods chain Muji’s US business has filed for Chapter 11 bankruptcy protection on Friday (10 July).

Following the temporary closure of its 18 American stores back in March (due to the pandemic), the retailer is reportedly now trying to shut down some unprofitable stores and renegotiate rents.

It has also expressed a renewed focus on online sales.

“Muji has felt the devastating effects of the Covid-19 pandemic on in-store retail, and as a result will take this opportunity to refocus our efforts in the United States on key regional markets and e-commerce,” Muji CEO Satoshi Okazaki said in a separate statement on Friday.

According to the company, the bankruptcy process will “ensure the future health, growth, and viability of the company. Muji is committed to serving its customers in the market and providing a high quality of product and experience into the future.”

This will surely come as a big surprise to bystanders who are not in the loop; back in May, the retailer had actually announced plans to reopen a number of stores, where it offers dishes, beauty products and other items.

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But it seems that the recession has proven too tall a task for the chain. Apparently, the business has liabilities of $50 million to $100 million according to its bankruptcy filing.

For that uninitiated, liabilities mean money to be repaid, which mean debts lah.

To date, Muji currently remains open for business in its recently reopened stores, as well as its online platform.

S’pore Outlets So Far Unaffected

Despite Muji’s ‘downfall’ in the US market, the chain’s Tokyo-based parent company Ryohin Keikaku has stated that business in other markets will not be affected.

So to fans of the local Muji stores, no worries… yet.

Nevertheless, the situation does cut a concerning dilemma for the retailer. Following the closure of its stalls, Ryohin Keikaku reported a net loss of around 4.1 billion yen ($38.5 million) for the quarter ended May 31.

In comparison, the company announced a net profit of roughly 6.6 billion yen ($61.7 million) in the year-earlier quarter.

As much as they say it, one can’t help but wonder when other worldwide markets might (would) follow suit.

According to New York Post, Muji is the latest chain to fall to the Covid-19 crisis in the US.

In recent months, major retailers such as J. Crew, JCPenny, Neiman Marcus, Brookes Brothers and more have been forced to declare bankruptcy, as recession effects ripple worldwide.

However, bankruptcy does not necessarily mean closure on a firm’s part. For many, the process is used to clear debt, shut down unprofitable operations and focus on alternative profitable strategies.

Let’s hope that the business will get back on its feet soon.

In the meantime, right here in Singapore, it was just a few days ago that we confirmed the closure of a well-beloved brand: Sportslink.

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Zhi Hao
Email: [email protected]