Muji’s H1 revenue in mainland market slides 0.2% as brand image ebbs

Japanese retail chain Muji’s revenue in China for the fiscal first half, which ended on August 30, was down by 0.2 percent, even after the retailer reduced its selling prices in China nine times within four years.

Muji’s comparable-store sales in the second quarter fell 2.2 percent, which compared with a 1.8 percent rise in the first quarter, resulting in a 0.2 percent revenue decline in the first six months of fiscal 2018, according to the company’s financial statement.

Second-quarter net profit stood at 8.56 billion yen ($75.66 million) in the Chinese market, compared with a net profit of 9.54 billion yen recorded in the first quarter.

The weak results, in contrast to solid sales when the brand entered the Chinese mainland in 2005 and gained popularity among Chinese consumers, came after the retailer’s latest effort in January to launch the largest-ever price cut in China.

Industry observers pointed out that the retailer’s reputation has been falling in China. In September, a branch in Beijing reportedly refused to cooperate with a sampling inspection by local authorities, casting a shadow over the brand’s image.

In January, the company also angered Chinese consumers with a serious map problem on one of its product catalogues. On that map, some borders and islands of China such as the Diaoyu Islands and South China Sea Islands are missing.