Kim Chang-su, CEO who launched 'New F&F', starts global campaign for 'K-Fashion'

Discovery Establishes New Fashion Business Entity Holding MLB Rights
Sales Increased 10x Over 12 Years, Targeting US and Europe After Settling in China Market

[Asia Economy Reporter Lim Hye-seon] F&F has officially launched as a holding company system, raising the anchor of the ‘New F&F.’ It has been 28 years since the company began its fashion business in earnest in 1992. Founder and CEO Kim Chang-soo plans to enhance management efficiency and transparency through business structure reorganization and to prepare next-generation growth engines.

Standing at the Starting Point of a New Leap

On the 1st, F&F completed a spin-off into the surviving company F&F Holdings (holding company) and the newly established investment company F&F. The new shares are scheduled to be listed on the 21st. F&F Holdings will be re-listed on the KOSPI, and the newly established company will be re-listed as well. F&F Holdings will manage subsidiaries and invest in new businesses, while F&F will focus on the fashion business, operating a ‘two-track’ management system.

CEO Kim Chang-soo will lead F&F and concentrate on the core fashion business. Park Ui-heon, a professional manager, was appointed as the first head of F&F Holdings. Born in 1964, Park has worked at management consulting firms such as Bain & Company and served as CEO of Meritz Financial Group and KTB Investment & Securities. Park will focus on stabilizing the holding company system and discovering new businesses through investments linked to fashion. The F&F Holdings board consists of three inside directors: CEO Kim Chang-soo, CEO Park Ui-heon, and Executive Director of Finance Ma Jung-man, along with outside director Kim Dong-il, CEO of DK Value Solutions.

Kim Chang-su, CEO of F&F

Sales Increased 10 Times, Operating Profit 12 Times

F&F’s sales grew more than tenfold from 78.9 billion KRW in 1998 to 837.6 billion KRW last year. Operating profit also jumped twelvefold from 9.6 billion KRW to 122.5 billion KRW. This achievement was led directly by CEO Kim, who oversaw design, branding, production, and distribution across all business divisions. F&F manufactures and sells licensed brands MLB, MLB Kids, Discovery Expedition (Discovery), and its own brand Stretch Angel. As of last year, the sales composition by brand was MLB 57%, MLB Kids 6%, Discovery 37%, and Stretch Angel 0.4%.

The main drivers behind F&F’s rapid growth were Discovery and MLB. CEO Kim acquired the Korean license for the American broadcasting channel Discovery and developed it into an outdoor brand. Earlier, since 1997, he purchased the license for the American professional baseball Major League and started selling hats, later expanding into clothing and footwear categories. His judgment proved correct. Sales increased to 200.7 billion KRW in 2012, 370 billion KRW in 2015, 560.5 billion KRW in 2017, and 837.6 billion KRW in 2020. The domestic apparel market has shown a low-growth trend with an average annual growth rate of 1.2% over the past seven years. The outdoor sector shrank by 20%. However, Discovery grew 24% during the same period and became a ‘mega brand’ with annual sales exceeding 300 billion KRW. In the first quarter of this year, sales and operating profit reached 285.7 billion KRW and 70 billion KRW, rising 72% and 304%, respectively.

Accelerating Overseas Business, Targeting China First

CEO Kim has put effort into pioneering overseas markets. F&F established a Hong Kong corporation in 2017 and signed a license contract for MLB China in January 2019, subsequently setting up a local corporation in Shanghai. Last year, instead of expanding stores, the company focused on generating sales through local partners to minimize risk. Sales in China increased more than sixfold from 11.9 billion KRW in 2019 to 74.5 billion KRW in 2020. Average daily sales on Tmall also rose from around 30 million KRW in 2019 to 80 million KRW as of the third quarter last year. Sales in the first quarter of this year recorded 49.5 billion KRW, a 690% surge compared to the same period last year.

F&F China plans to increase the number of stores to 270 by the end of this year. In addition to two corporations in China, F&F has established overseas corporations in Vietnam, the United States, and Italy. After securing a foothold in the Chinese market, F&F plans to enter new markets.