[Click eStock] "Clio, Focus on Industry Improvement in the Second Half"

[Asia Economy Reporter Ji-hwan Park] Shinyoung Securities maintained a 'Buy' rating and a target price of 25,000 KRW for Clio on the 17th, highlighting the need to focus on the improvement of business conditions in the second half of the year.

Shin Su-yeon, a researcher at Shinyoung Securities, stated, "Clio's second-quarter sales and operating profit recorded 56.1 billion KRW and 3.2 billion KRW, up 12.9% and 1.2% respectively compared to the same period last year. The sales growth rates by channel were Club Clio (-69.2%), H&B (+11.1%), online (+30.5%), duty-free (+61.3%), wholesale (-57.3%), and global exports (+33.3%). By brand, Clio (+22.4%), Peripera (0.0%), Gudal (-17.4%), Dermatory (-17.3%), and Healing Bird (+167.9%) were recorded.

In particular, the China business is evaluated to have gotten on track. Clio's second-quarter performance slightly missed consensus, which is analyzed to be due to sluggish offline sales compared to the previous quarter, affected by the restructuring of Club Clio offline stores completed by the first half and the absence of H&B promotional events. Currently, the number of Club Clio stores stands at 27, down 21 from the end of last year.

Online sales increased by 30.5% year-on-year, maintaining a sales level similar to the previous quarter. Domestic online sales continued to decline following the first quarter, but overseas online sales increased by 117.1% year-on-year, supported by solid performance in China and Japan.

Researcher Shin said, "From this year, sales from Tmall domestic and reverse direct purchase, previously recorded under the Shanghai corporation, have been classified as China online sales under the headquarters." She added, "Shanghai corporation sales increased by 7.9% year-on-year, but due to the lack of active marketing activities, sales related to the 618 event remained similar to the same period last year despite the event." However, combined China sales, including Shanghai corporation and headquarters China online sales, recorded 10.4 billion KRW, up 107.9% year-on-year, reaching an all-time high. Sales in Japan increased by 51.2% year-on-year, driving export sales growth.

Attention should be paid to the extent of performance improvement in the fourth quarter. Researcher Shin said, "The restructuring of the offline store Club Clio was completed by the first half, and a performance turnaround is planned for the second half." He forecasted, "Since the third quarter is the low season for cosmetics sales, the focus will be more on profitability improvement rather than sales growth, with full-scale external growth planned for the fourth quarter."