AmorePacific Group Operating Profit Drops 49% Due to COVID-19 Impact (Comprehensive)

[Asia Economy Reporter Jo Yoo-jin] Amorepacific Group announced on the 28th that its consolidated operating profit for the third quarter of this year was tentatively estimated at 61 billion KRW, a 49.4% decrease compared to the same period last year.

During the same period, sales decreased by 23% to 1.2086 trillion KRW, and net profit dropped by 93.7% to 7 billion KRW.

The main affiliates, Amorepacific (-22%) and Amos Professional (-12%), recorded a decline in operating profit, while Innisfree and Espoir each turned to a loss.

For Amorepacific, domestic business operating profit fell by 57%, and overseas business decreased by 43%. Sales also declined by 28% and 13%, respectively. However, in the Chinese market, online sales of luxury brands grew by more than 80% compared to the previous year.

The trend of a sharp decline in operating profit continued due to the impact of the novel coronavirus infection (COVID-19). The company explained that the aftereffects of COVID-19 and channel restructuring led to a decrease in sales in offline channels such as duty-free shops, department stores, and road shops, resulting in a decline in operating profit. Overseas, the spread of COVID-19 continued, causing overall sales and operating profit to decrease.

However, growth in online channels was remarkable due to strengthened digital marketing. Luxury brands performed well in the Chinese online market, and market diversification continued with Sulwhasoo entering India's Nykaa and Etude entering multi-brand shop channels in China and Malaysia. The North American and European markets faced difficulties due to offline channel adjustments and decreased tourism demand, leading to a decline in sales.

Amorepacific Group is determined to establish a foothold for performance improvement through innovative product launches and synergistic marketing both online and offline within the year.