Cosmetics Performed Well but Fashion Sector Declined Significantly
Amuse and Others Promote Overseas Expansion in Cosmetics
Seeking New Opportunities through Fashion and Licensing Business Development
Shinsegae International recorded a sharply decreased operating profit in the second quarter of this year. Although the cosmetics sector continued its growth trend, sales in the fashion sector significantly declined due to reduced consumer spending amid the economic downturn.
According to the Financial Supervisory Service's electronic disclosure system on the 7th, Shinsegae International posted sales of 320.9 billion KRW in the second quarter, a 3.9% decrease compared to the same period last year. Operating profit for the quarter was 13.3 billion KRW, plunging 28% year-on-year, and net profit was 15.5 billion KRW, down 20% over the same period. Considering that the market had estimated the company's sales and operating profit at 331.1 billion KRW and 15.8 billion KRW respectively, the results were weaker than expected. On a half-year basis, the company's sales were 630.3 billion KRW and operating profit was 24.4 billion KRW, down 2.4% and 15% respectively compared to the first half of last year.
By business segment, the cosmetics division grew 9% compared to the same period last year. The cosmetics business is divided into in-house cosmetics brands such as Swiss Perfection, Poare, Yeonjak, and Vidi Vici, and overseas cosmetics focusing on niche perfumes, with both segments showing balanced sales growth.
Within the in-house cosmetics division, Vidi Vici and Yeonjak showed remarkable sales growth. Vidi Vici’s 'Longwear Skin Fit Cushion' was a popular product, contributing to strong first-half performance. Sales of this product increased by 173% compared to the second half of last year. The high-performance skincare brand Yeonjak continued its growth momentum with over 30% growth in the first quarter and steady demand in the second quarter centered on key products such as ‘Skin Perfecting Protective Base Prep’ and ‘Jeoncho Concentrate.’ In the imported cosmetics segment, Hourglass and Laura Mercier made notable advances.
In the fashion division, domestic fashion sales are estimated to have sharply declined. Imported fashion brands such as UGG, Sacai, Courr?ges, and The Row helped boost sales. Sojung Cho, a researcher at Kiwoom Securities, explained, "While the cosmetics business maintains good growth, the contraction in the consumer market has significantly impacted clothing sales."
Shinsegae International plans to focus its efforts on improving performance through business structure reforms in the second half of the year. The cosmetics division aims to expand export volumes in the global market, while the fashion division plans to enter the licensing business.
The cosmetics division has selected 'Amuse' and 'Swiss Perfection' as brands for overseas expansion. Shinsegae International recently acquired Amuse, a specialized color cosmetics company. Known domestically for the 'Jang Wonyoung Tint,' the brand is also very popular in North America, Southeast Asia, and Japan. The company intends to actively invest in Amuse to establish a crucial foundation for global business expansion. Additionally, Swiss Perfection is completing facility investments made last year and is now targeting overseas markets.
In the fashion sector, the company will focus on expanding its licensing business centered on Harley-Davidson. Starting this September, the company plans to launch collections under the Harley-Davidson brand in Korea and major Asian markets. Shinsegae International has previously operated eight licensing businesses, including Senjohn Blue Label, Edited, and Jones New York, but these did not significantly contribute to sales. This was because the company only granted brand operation rights to other channels such as home shopping and received commissions. A company official stated, "We plan to actively pursue the licensing business starting with Harley-Davidson," adding, "This can be seen as a new business model established this time." The official emphasized, "We will continue business structure reforms to build a resilient corporate structure capable of overcoming crises."
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