South Korea boycott hitting sales of Japan's Uniqlo, company says

TOKYO (Reuters) – A boycott on Japanese goods in South Korea has had an impact on casual clothing chain Uniqlo’s sales in the country, the company said on Friday, highlighting the widening economic hit from a diplomatic row over Tokyo’s wartime role.

Japan’s decision last month to tighten controls on exports of materials that South Korea uses to make semiconductors and smartphone displays has prompted a consumer backlash in Korea, with consumers boycotting Japanese products from beer to pens.

Relations between the two U.S. allies are now at their worst in decades. The dispute is rooted in compensation for forced laborers during Japan’s occupation and South Korea has repeatedly invoked its difficult history with Japan, which colonized the Korean peninsula during World War Two.

“We can confirm that there has been an impact on the sales in Korea,” a spokeswoman for Uniqlo owner Fast Retailing (9983.T) said, declining to give figures.

The company’s recent decision to close a store in Seoul was unrelated to the boycott, the spokeswoman said, adding that the contract for the property had ended and the company decided not to renew.

Japan cited security concerns for the curbs. The move, however, has also been seen as retaliation after a South Korean court last year ordered Japanese companies to compensate Koreans who were forced to work for Japanese occupiers during World War Two.

Japan has also removed South Korea from a list of favored trading partners.

Uniqlo is one of Japan’s more visible brands globally outside the auto and electronics industries. It has close to 190 stores in South Korea where it sells around 140 billion yen ($1.3 billion) of clothes annually, or 6.6% of its revenue.