[Asia Economy Reporter Seungjin Lee] Tony Moly, a first-generation cosmetics company that had been on a decline due to the downfall of road shops, is making a comeback. The company plans to strengthen its online mall and other areas using operating funds secured through a paid-in capital increase.
According to the cosmetics industry on the 11th, Tony Moly carried out a paid-in capital increase worth 27.9 billion KRW. The subscription price was 4,920 KRW. Of the funds raised through this capital increase, 18.7 billion KRW will be used for debt repayment, and 9.2 billion KRW will be used as operating funds.
Tony Moly was one of the key players leading the Korean Wave in cosmetics. However, its business rapidly contracted following its entry into the Chinese market and the THAAD (Terminal High Altitude Area Defense) incident. Since 2017, its operating profit turned negative. Additionally, the continuous setbacks of fierce competition among domestic road shops and the COVID-19 pandemic led to further decline.
Tony Moly’s operating losses started at 1.9 billion KRW in 2017, increased to 5.1 billion KRW in 2018, 300 million KRW in 2019, and surged to 25.5 billion KRW last year. Its debt ratio also soared from 74.9% in 2017 to 183.5% last year. Meanwhile, road shops rapidly disappeared nationwide. The number of road shops, which was 679 in 2017, decreased to 517 in 2019 and sharply dropped to 457 this year.
Tony Moly plans to improve its business structure through this emergency capital injection. First, it will reduce the proportion of makeup products. In fact, the share of makeup products in total cosmetics sales fell from about 30% in 2019 to below 15% this year. Instead, the company intends to strengthen its eco-friendly skincare products and hair and body lines. In particular, it plans to invest about 6.2 billion KRW in enhancing its clean beauty lineup, including the recently launched functional hair loss relief product ‘Tune Nine,’ and marketing activities.
The company will also strengthen its online mall. Of the operating funds raised through the paid-in capital increase, 2 billion KRW will be used to enhance its big data platform. The first phase of the data analysis platform ‘TOMAS’ has already been completed. Continuous updates will be made, and big data technology will be added to its own mall. Additionally, it will invest in expanding sales on overseas online platforms. Having experienced difficulties with overseas road shop expansion in the past, Tony Moly plans to focus on online channels. To this end, it has established a Global Digital Business Division and plans to allocate 2.1 billion KRW to this division to strengthen sales on overseas online platforms such as Amazon.
An industry insider said, "Tony Moly is rapidly closing offline stores and improving its business structure. Along with diversifying its business by entering the health functional food and pet sectors, it is actively strengthening its online cosmetics business, showing the most dynamic movement among first-generation mid-priced cosmetics companies whose businesses had declined."
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