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Uniqlo faces eviction in Myeong-dong
Publication Date : 06-02-2013
Uniqlo, a casual apparel designer and manufacturer based in Japan, is at risk of being evicted from its Myeong-dong location, the largest site yet for the company in Asia.
The Seoul District Central Court recently ruled in favour of 14 plaintiffs who have ownership over the space of Uniqlo’s Korean operations run by Fast Retailing Korea.
The judge said that the building managers were found to have rented out the building to Uniqlo without consulting or notifying the plaintiffs, and therefore, the real estate could be placed under temporary injunction.
This means Uniqlo could lose its store in Myeong-dong, one of the most bustling shopping districts in Korea where many a foreign clothing brand, including Uniqlo, enjoys massive crowds and sales.
Fast Retailing, the parent company of Uniqlo, earlier this month said its global net operating profit for 2012 rose by more than 20 per cent from the previous year.
Ken Okazaki, the chief financial officer of the company, said sales from the Korean and Chinese markets had made bigger-than-expected contributions to the increase.
The legal dispute involving the Myeongdong store dates back to 2006 when the 14 plaintiffs purchased the rights to the building where Uniqlo is situated.
Initially, the rent demand was low, and the owners sought to jointly rent out whole floors. When that attempt also failed to draw a crowd, the owners rented out the entire building as a whole in 2011, this time successfully, to a single corporation.
This company, in turn, rented out the first to fourth floors to Uniqlo Korea that same year.
However, the plaintiffs had not fully given their assent, and filed a suit against Uniqlo Korea and the company that rented out the space.
The judge said in the verdict that Uniqlo was obligated to transfer the store back to the plaintiffs, adding that the court had the authority to execute the decision.
Uniqlo representatives said they were reviewing the situation and could not yet offer an official comment.