Contract Change Announcement, Operating Rights Extended Until 2032
Ski Brand 'Goldwin' to Terminate Contract Starting Next Year
Performance Improvement Expected... Non-Compete Clause Applies Only to Holdings
Youngone Outdoor, a subsidiary of Youngone Holdings, has extended its license agreement for The North Face brand by an additional three years. By securing more operating rights for The North Face, Youngone Outdoor is expected to operate its business more stably.
According to the Financial Supervisory Service's electronic disclosure system on the 4th, Youngone Holdings changed the license period for The North Face trademark rights between Youngone Outdoor and Japan's Goldwin to December 31, 2032. Goldwin holds the trademark rights for The North Face brand in the Asian region.
Youngone Holdings announced that it renewed the license agreement for The North Face trademark rights and will extend the operation for seven more years from January 1, 2023, to December 31, 2029, deciding to extend the period after about two years.
Youngone Outdoor is the company overseeing The North Face's domestic business. It introduced the ski brand 'Goldwin' in 1992 and 'The North Face' in 1997 to Korea. Youngone Outdoor's former name was Goldwin Korea. The company name was created when Youngone Trading and Goldwin Korea formed a joint venture to bring the Goldwin brand to Korea for the first time. Currently, Youngone Holdings is the largest shareholder of Youngone Outdoor, holding 59.3% of the shares. Goldwin holds 40.7% of the shares.
The two parties renewed the license agreement for The North Face twice on a 10-year cycle in 2002 and 2012, but in the 2022 contract, the term was set to seven years. Therefore, it appears that this time they extended it by an additional three years.
Additionally, Youngone Outdoor announced that through this contract change, it will terminate the license agreement for the 'Goldwin' brand products as of January 1, 2025. The Goldwin brand is a ski brand operated by Goldwin. Unlike The North Face, the Goldwin brand did not have a separate contract expiration date; the contract would end upon the expiration of the joint investment agreement or termination of the license agreement.
Youngone Outdoor pays royalties to Goldwin as compensation for receiving trademark rights and technical services such as production and advertising. Last year, Youngone Outdoor paid Goldwin 33.7 billion KRW in royalty fees for operating The North Face and Goldwin brands. The royalty amount has increased annually from 15.1 billion KRW in 2020, 19.6 billion KRW in 2021, to 27 billion KRW in 2022. As The North Face's sales have increased year by year, the royalty fees have expanded, but with the termination of the Goldwin brand business, the growth rate is expected to slow down from next year.
Expectations for performance growth are also likely to increase. The North Face is one of the highest-grossing domestic outdoor brands. Over the past two years, the short padding jacket 'Nuptse' has been extremely popular among the MZ generation (Millennials + Generation Z) and sold rapidly. Last winter, due to warmer-than-expected weather, padding products did not sell well, and outdoor companies offered large discounts to sell their products. However, some Nuptse products from The North Face were sold out, making them unavailable for purchase. The North Face exceeded 1 trillion KRW in sales (based on selling price) as a single brand last year.
Thanks to The North Face, Youngone Outdoor's sales are soaring. Last year, Youngone Outdoor's sales and operating profit were 961.4 billion KRW and 242.5 billion KRW, respectively, showing growth of 26% and 32% compared to the previous year. Sales more than doubled in three years since 2020. A Youngone Trading official said, "It is true that we had positive discussions about management direction and decided to continue the partnership," but added, "However, we cannot disclose specific details related to the disclosure content."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
