COVID-19, anti-Japan movement hit fashion retailer
Japan's clothing giant Uniqlo is shutting its flagship store in Seoul's shopping district of Myeong-dong, amid a plunge in sales attributed to COVID-19 and the No Japan Movement initiated last year.
According to Uniqlo's website, Sunday, the Myeong-dong store will operate until Jan. 31, 2021.
The four-story Myeong-dong location is Uniqlo's second-largest store worldwide, after the one on New York's Fifth Avenue. The Myeong-dong outlet recorded 2 billion won in sales in a day when it opened in November 2011.
After Uniqlo entered Korea in 2005, the brand earned popularity for its affordability, which drove a rapid growth in sales backed by nationwide expansion of stores.
Yet trade restrictions slapped by Japan on Korea in July 2019 ignited a movement here to boycott all Japanese products. The boycott was fueled after an executive of Uniqlo's headquarters stated the following month the movement would not last long. In October the same year, Uniqlo sparked another controversy over an ad Koreans claimed mocked former sex slaves for the Japanese military during World War II.
The events collectively took a toll on Uniqlo's sales, prompting the retailer to close outlets. Uniqlo closed 26 stores from January to November this year.
The COVID-19 pandemic worsened the situation for the retailer this year as fewer people came to stores to purchase its clothing, especially the tourist site in Myeong-dong.
The launch of a collection in collaboration with German designer Jil Sander sparked temporary interest last month, with customers lining up outside major outlets in Seoul to purchase the garments.
But Uniqlo plans to shutter eight more outlets by the end of this year. Uniqlo now operates 164 stores in Korea, according to its website.
Uniqlo's business here is operated by FRL Korea, a joint entity set up by Uniqlo's parent company Fast Retailing and Korea's Lotte Shopping.
According to company filings Friday, Uniqlo's sales from Sept. 1, 2019, to Aug. 31 this year were 629.8 billion won. It posted an 88.4 billion won operating loss and a 99.4 billion won net loss.
From Sept. 1, 2018, to Aug. 31, 2019, Uniqlo logged 1.38 trillion won in sales. It recorded a 199.4 billion won operating profit and 163.3 billion won net profit.
These figures show a 54.3 percent plunge in sales year-on-year.
Cash and cash equivalents also fell 75.4 percent to 23.8 billion won from 96.7 billion won in the same period.
Uniqlo, which paid 121 billion won in dividends to shareholders last year, did not pay dividends this year.
"Whether it is a country or company involved in wrongdoing, only when the people make them pay the price for their action, will they become more responsible,” said a comment in a related news article.
FRL Korea was unavailable for comment.