[People人] The Fashion World's 'Midas Touch' Stands at the Starting Point for 100-Year Company Growth

Kim Chang-su, F&F Chairman, Expands Territory, Focuses on Fashion Business
Taylormade Golf Equipment Company Acquired with 500 Billion Won Bet
Diversifying Concentrated Business Portfolio

[Asia Economy Reporter Lim Hye-seon] Kim Chang-soo, chairman of F&F Group, has reached a new starting point for building a century-old company. Chairman Kim, who focused on converting to a holding company in the first half of this year, is expanding the business areas for the group's sustainable growth.

Completion of Governance Restructuring

In May, F&F completed a spin-off into the surviving company F&F Holdings (holding company) and the newly established investment company F&F. F&F Holdings was re-listed on the KOSPI, and the newly established F&F was re-listed as well. The surviving company, F&F Holdings, focuses on new business investments, while the newly established F&F concentrates on the fashion business, operating a 'two-track' management system. The governance improvement process will be completed successfully once a paid-in capital increase of approximately 1.6 trillion KRW is secured to meet the holding company establishment and activity restriction requirements stipulated by the Fair Trade Act.

Typically, the founder takes charge of the holding company while professional managers run the operating company, but Chairman Kim serves as CEO of F&F, focusing on the core fashion business. F&F Holdings is entrusted to professional management. The holding company was established to allow full dedication to the fashion business. Born in 1964, CEO Park Ui-heon has experience at management consulting firms such as Bain & Company and has served as CEO of Meritz Financial Group and KTB Investment & Securities. CEO Park is committed to stabilizing the holding company system and discovering new businesses through investments linked to fashion. The F&F Holdings board consists of three inside directors: Chairman Kim, CEO Park Ui-heon, Executive Director of Finance Ma Jung-man, and outside director Kim Dong-il, CEO of DK Value Solutions.

The Midas Touch of the Fashion Industry

Kim Bong-gyu, the second son of the founder of Samsung Publishing, Chairman Kim entered the fashion business in earnest by establishing F&F in 1992. The phrase "the Midas touch of the fashion industry" is always attached to Kim Chang-soo's name. Over the past 26 years, Chairman Kim has created a success story in the fashion market through continuous change and innovation. He directly leads all business areas including design, branding, production, and distribution. He laid the foundation in the fashion market by bringing overseas brands such as Benetton and Elle to Korea and succeeded in turning non-fashion trademarks into fashion brands. MLB and Discovery Expedition are all trademark brands. 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. MLB and Discovery account for over 90% of sales.

After establishing a Hong Kong subsidiary in 2017, Chairman Kim signed an MLB China license contract in January 2019. Subsequently, a local subsidiary was set up in Shanghai. China sales 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. F&F's China subsidiary plans to increase the number of stores to 270 by the end of this year. In addition to two subsidiaries in China, overseas subsidiaries have been established in Vietnam, the United States, and Italy. F&F plans to enter new markets after settling in the Chinese market.

Second Leap with TaylorMade

Chairman Kim chose golf equipment maker TaylorMade as a new brand alongside MLB and Discovery. This diversifies the concentrated business portfolio and alleviates concerns about business sustainability due to the lack of proprietary brands.

Chairman Kim is betting a total of 500 billion KRW on the TaylorMade acquisition. F&F joined as a new strategic investor (SI) in the fund raised by Centroid Investment Partners (Centroid PE), a domestic private equity fund, to acquire TaylorMade. This process is similar to how Fila Korea acquired Acushnet.

TaylorMade is considered one of the world's top three golf equipment companies alongside Acushnet and Callaway Golf. According to Daishin Securities, TaylorMade's sales last year were 900 million USD (about 1 trillion KRW), with operating profit estimated at 110 billion KRW. Chairman Kim focused on the rapid growth of the golf apparel market as the young golf population in Korea and China increases. He is expected to combine the strong brand power of TaylorMade with F&F's management expertise to make a bold move in overseas markets.