Zero to Seven Ends Fashion Business Due to Low Birthrate... Focuses on Gungjungbichek and Packaging Business

Closure of Fashion Division Due to Sales Decline and Operating Losses

[Asia Economy Reporter Eunmo Koo] Zero to Seven, a company specializing in infant and children's products, is improving profitability through a 'selection and concentration' strategy by ending its fashion business, which had been struggling due to declining birth rates, and focusing on cosmetics and packaging businesses.

According to Zero to Seven on the 1st, the fashion business division will cease operations on the 30th of this month. Zero to Seven operates children's clothing brands such as 'Alo&Luu,' 'Alfonso,' and 'Mimi Rev.'

With the birth rate falling to an all-time low and intensified competition in the domestic children's clothing market causing prolonged deficits, the company is understood to be restructuring its business around more profitable sectors.

The company stated, "We decided to terminate the fashion business due to continuous sales decline and operating losses," adding, "We will focus on exhausting remaining inventory." Operating losses in the fashion division, which were only around 2.2 billion KRW in 2017, expanded to 8.6 billion KRW last year, accumulating a total deficit of 36.9 billion KRW over five years.

Instead of the fashion business, Zero to Seven plans to enhance profitability by concentrating on its cosmetics business 'Gungjung Bichek' and packaging business. The company explained that Gungjung Bichek and the packaging business are continuously pursuing mid- to long-term growth by strengthening product competitiveness, enhancing domestic and international presence, and diversifying markets.

Gungjung Bichek ranks first in the infant and children's sun care category on China's shopping mall Tmall and has been recognized in the domestic and international infant and children's markets by winning the 'Korea National Brand Award' in the baby skincare category for four consecutive years this year. In March, it launched the premium baby line 'Preemun,' which improved efficacy and product quality, continuing its growth. The company plans to accelerate overseas expansion not only in Korea but also in Greater China, Southeast Asia, and North America.

The packaging division is the only domestic manufacturer of powder product can lids and exports to over 20 countries. It is diversifying its manufacturing from powdered milk lids (POE) to adult nutritional foods and coffee in Korea, and expanding export destinations from primarily Oceania to the United States and Europe.