Kolon FnC Halts Cosmetics Business Amid 'Corona Blackhole' Crisis

[Asia Economy Reporter Yujin Cho] The relaunch of the cosmetics brand 'Mquiri,' which was being prepared by fashion company Kolon Industries FnC Division (hereafter Kolon FnC), has been halted due to the COVID-19 pandemic.

According to industry sources on the 21st, Kolon FnC has indefinitely postponed the final decision on the brand renewal work of Mquiri, which was underway with the goal of launching in early the second half of this year. This decision was made considering that the entire domestic and international cosmetics market has fallen into a severe slump due to the impact of COVID-19, and the rapidly changing market environment surrounding the industry may require changes to the brand renewal work.

A Kolon FnC official stated, "We originally planned to launch a fully renewed new brand targeting June, but due to the COVID-19 situation, we have not been able to make the final decision related to this, so the launch schedule is currently uncertain."

Since COVID-19, discussions have continued that changes in the business model are inevitable as the environment surrounding the industry is rapidly changing in real-time, including a decline in sales of color cosmetics and changes in sales channels centered on online platforms. It is also known that the management decision to halt the renewal work reflects the judgment to focus solely on stabilizing the core fashion business until the second half of this year, as the worsening business performance due to the COVID-19 recession has led to poor earnings and financial deterioration.

Kolon FnC switched to an emergency management system from June to reduce costs amid the COVID-19 recession. Until December, all 27 executives are implementing a 10% salary cut, and to promote the use of annual leave among all employees, every third Friday of the month during the same period has been designated as a company-wide holiday. Kolon FnC posted an operating loss of 14 billion KRW in the first quarter, turning to a deficit compared to the same period last year, and recorded an operating loss of 7.3 billion KRW for the entire first half of the year.

Mquiri is Kolon FnC’s own skincare brand launched in May last year when the company first entered the cosmetics business. It consists of three lines and 15 product groups, promoting 'Science Skincare' as advanced scientific cosmetics. It has utilized core ingredients developed in partnership with affiliated company Kolon Life Science, which holds original technology, and bio company Proscelta Therapeutics. The renewal target aims for a complete overhaul, including the use of these core ingredients, as well as formulations, containers, and packaging across all lines. Sales to deplete inventory of already launched Mquiri products were halted in June ahead of the renewal.