Dive Brief:
- The U.S. arm of Japanese retailer Muji filed for Chapter 11 on Friday.
- The company entered bankruptcy with 200-plus creditors and more than $50 million in liabilities, according to court filings.
- Reuters reported that Muji is looking to close unprofitable stores and renegotiate leases in the Chapter 11 process, after the retailer's 18 U.S. stores closed in March because of the COVID-19 pandemic.
Dive Insight:
Muji's store openings in the U.S. have attracted lines of eager customers, drawn to its minimalist home goods, beauty and apparel products. A New York Times writer once called the retailer's SoHo store "gloriously affordable." The company started in Japan in 1980 as a generic grocery brand focused on everyday basics with simplified packaging and low prices. It arrived in the U.S. more than a decade ago.
Muji U.S.A.'s parent translates its full name, Mujirushi Ryohin, to mean "no-brand quality goods" and says that its origin "was a thorough rationalization of the manufacturing process with an eye to creating simple, low-cost, good quality products."
The retailer attracted shoppers to its U.S. stores with site-specific features like artistic collaborations and personalization efforts like custom gift-wrapping and embroidery stations. "It's more about experience, rather than obtaining an object or material goods," Toru Tsunoda, the president of Muji USA, told Retail Dive in 2017.
The company's parent was outperforming some of its peers ahead of the COVID-19 crisis. Jeffries analyst Michael Jon Allen said in a January note that the company was performing better than Adastria and United Arrows. With Muji's revenue driven primarily by new food items, Muji was bringing "food to a rag fight," Allen said in the note, which was emailed to Retail Dive in January.
The combination of wiped-out store revenue during the COVID-19 closures and pressures from landlords to continue paying rent have already driven numerous retailers into bankruptcy since March. Kitchenware specialist Sur La Table was among those to file this week, its CEO noting in court papers that it faced eviction proceedings and threats from landlords as well as the need to re-engineer its store footprint for the post-COVID-19 era.
