Uniqlo to close more stores while enhancing online options

FRL Korea CEOs Tatase Satoshi, on the left, and Jeong Hyeon-seok, on the right, pose after donating 3,000 Uniqlo pieces of clothing to the elderly at its headquarters in Seoul, on Aug. 2020. Courtesy of FRL Korea

By Kim Jae-heun

Uniqlo will shut down three more money-losing stores this month as part of its efforts to improve the company's bottom line, which has been significantly hit by anti-Japanese sentiment among Korean consumers, the Japanese clothing brand said Thursday. The ongoing COVID-19 pandemic has also played its part in leading to a decline of offline customers.

Uniqlo is one of the Japanese firms that was hit hard by local customers' movement to boycott Japanese products in 2019 after the Japanese government took retaliatory economic measures against the Korean Supreme Court's 2018 decision ordering Japanese company Mitsubishi to compensate surviving Korean victims of wartime forced labor.

Over the past two years, about 60 Uniqlo stores out of the 190 in Korea have closed down, including its signature branches in Myeong-dong, Jamsil and Gangnam in the Shinsegae Department Store.

These closures helped Uniqlo to recover quickly. From Sept. 2020 to Aug. 2021, the casual wear brand showed 582.4 billion won ($485.6 million) in sales, which is down by 7.5 percent year-on-year. But it also managed to achieve a turnaround to mark 52.9 billion won ($44.1 million) in operating profit, from 88.4 billion won ($73.7 million) in losses during the same period.

The Uniqlo store on Jongno, Seoul / Korea Times file

“Our business in 2022 will continue to get better. In the fourth quarter of last year, our revenue and profit increased by a big margin compared to those of the previous quarter, due to having cut the operating expenses of our unprofitable stores and increasing sales through online channels,” a Uniqlo official said.

Instead of visiting stores, customers purchased Uniqlo's steady sellers, such as Heattech and AIRism items, through online malls, which have driven the recovery of the Japanese brand's earnings.

Its collaborations with high-end brands like White Mountaineering and Jil Sander contributed substantially as well. Not only did they sell out of all the limited edition apparel from Uniqlo's online shop, but they also attracted huge number of customers to Uniqlo stores on the first days they revealed these collaboration pieces.

“The remaining Uniqlo stores in Korea show how efficient and competitive the company's business here is. As a well-known cost-effective company, Uniqlo will continue to improve its performance little by little rather than by seeking a single breakthrough,” Suh Yong-gu, a professor in the Business School at Sookmyung Women's University, said.

This year, Uniqlo plans to open 10 new stores in lucrative areas, particularly in the outskirts of Seoul.

The Japanese firm is also working to improve its brand reputation by participating in activities to give back to society. Last November, Uniqlo donated 130 million won worth of clothing to 20 orphanages in Busan.