Apparel companies have been forced to slash workforces and shut down stores as the impact of the novel coronavirus weighs on the industry's overall business performance.
Amid a resurgence of coronavirus infections, there are no prospects in sight for industry companies to get operations back up to normal, and major reviews of business strategies are inevitable.
World Co., whose brands include Untitled, on Wednesday announced structural reform measures such as offering buyouts to about 200 employees. The company will also scrap five of its unsuccessful brands, including Auagirl and OZOC, and close 358 stores.
In consolidated earnings for the April-June period, which the company also announced Wednesday based on international accounting standards, it posted a net loss of 2.4 billion yen from a net profit of 6.6 billion yen a year earlier. Its earnings were hit hard as most of its stores were closed temporarily after the government declared a state of emergency because of the pandemic.
The company's chairman, president and other executives will have their monthly remuneration sliced by 30% for one year.
"There is no optimism about the future," the company said in a statement. It also vowed to modify its corporate organization to "for a stronger" frame by promoting the "selection and concentration" of its business.
United Arrows Ltd. also reported profit dips on Wednesday, posting a consolidated net loss of 3.5 billion yen for the April-June period from a net profit of 1.9 billion yen a year earlier. The temporary closure of its stores brought down its sales in April by 60% year on year.
"The unprecedented coronavirus pandemic has brought on extremely challenging numbers," United Arrows President Mitsuhiro Takeda said on a conference call. He also stated an intention to close unprofitable outlets.
Long-established apparel makers are also no exception. Renown Inc., which filed for bankruptcy protection under the Civil Rehabilitation Law in May, has begun taking steps since July to close several hundred stores nationwide and eventually reduce its workforce of about 900 employees to less than 400.
Onward Holdings Co. plans to consolidate about 700 outlets at home and abroad by February next year. The Japanese unit of Brooks Brothers, whose U.S. parent company filed for bankruptcy, will shut more than 10 stores in Japan by the end of August.
Apparel companies had seen the industry on a recovery trend in June when the spread of virus infections subsided. However, the number of infections has increased again since July, particularly in Tokyo and other urban areas, once more dragging down sales and the number of customers.
According to Tokyo Shoko Research Ltd., there have been 50 virus-related bankruptcies in the apparel industry since February, the second-highest figure after the restaurant sector at 59.
"The impact of the virus will linger on for some time," an analyst said. "It's difficult to survive without building a business model that doesn't depend on brick-and-mortar stores."
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