Castelbajac Takes on 'Player Management'... Struggling to Escape the 'Deficit Trap'

Agenda to Add Business Purpose Proposed for Next Month's Regular Shareholders' Meeting
Sports Management to Be Included as an Ancillary Business
Agency Operations to Cover Player Management and Sponsor Matching
Aiming to Offset Sluggish Golf Wear Sales Amid Domestic Downturn
Seeking Performance Improvement Through New Business and Global Expansion

Fashion Group Hyungji's golf wear brand Castelbajac is expanding its business scope into the sports management field, overseeing golf player agency operations and more. This move appears to be an effort to recover from ongoing losses amid the cooling golf fever following the COVID-19 pandemic and the compounded domestic economic downturn.

According to the Financial Supervisory Service's electronic disclosure system on the 19th, Castelbajac recently announced that it will propose an agenda to amend part of its articles of incorporation at the regular shareholders' meeting on the 13th of next month to add "sports management business" as a business purpose. Through this, the company plans to provide comprehensive support, including player care, promotion, and schedule management at tournaments, as well as matching players with key main sponsors.

Castelbajac store. Provided by Castelbajac

A Castelbajac representative explained, "We have already been supporting some professional golfers and connecting companies interested in sponsorship with players," adding, "We are pushing for the amendment of the articles of incorporation to formalize this into a full-fledged business."

Previously, Castelbajac entered player management in 2022 and signed a management contract with promising Korean Ladies Professional Golf Association (KLPGA) regular tour player Lee Jeong-min at the end of last year. The company plans to expand its activities by recruiting additional players in the future. Through this, it expects to attract domestic and international sponsors and generate additional revenue, including agent commissions.

Castelbajac's interest in new business ventures is interpreted as part of its search for new revenue streams to compensate for declining competitiveness in the domestic golf wear market, its core business. As of the third quarter of last year, the sales proportion of golf apparel and golf accessories among Castelbajac's main product lines reached 83.2%.

However, while competitors in the same industry experienced a temporary growth spurt due to a significant increase in golf participation during the COVID-19 pandemic, Castelbajac's performance did not rebound. In 2020, it recorded sales of 67.3 billion KRW and operating profit of 7.5 billion KRW, but the following year it posted an operating loss of 4.3 billion KRW, turning to the red. Last year, sales dropped to 40.7 billion KRW with an operating loss worsening to 9.3 billion KRW. The company cited the decline in sales as the main cause of poor performance. Domestic sales of apparel and accessories, which reached 72.7 billion KRW in 2021, amounted to only 26.8 billion KRW by the third quarter of last year.

Castelbajac is a French designer brand whose domestic trademark rights were acquired by Fashion Group Hyungji in 2014. In 2016, it was spun off from Fashion Group Hyungji and acquired the global trademark rights by taking over the French headquarters PMJC S.A.S. Choi Jun-ho, the eldest son of Choi Byung-oh, chairman of Fashion Group Hyungji, has been serving concurrently as CEO since May 2021.

Last week, Chairman Choi met with the original designer Jean-Charles de Castelbajac in Paris, France. The meeting aimed to discuss Castelbajac's global expansion and strengthen the cooperative relationship with the designer. Previously, after Fashion Group Hyungji acquired PMJC, it became embroiled in lawsuits filed by the designer alleging copyright infringement and business interference. This meeting is seen as a move to resolve the dispute and empower Vice Chairman Choi.

Instead of relying on the domestic market, which is facing limitations, Castelbajac is seeking breakthroughs overseas in markets such as China and Taiwan. It has expanded its distribution network by collaborating with "100 Golf," the top golf equipment online mall and golf specialty store operator in China. In Taiwan, it is supplying products to both online and offline channels, including department stores, through cooperation with "Kingbone," a local fashion distribution specialist. Similar to how Hyungji Elite, which focuses on school uniforms, discovered new growth engines by supplying uniforms and goods to domestic professional baseball and overseas professional soccer teams under Vice Chairman Choi's leadership, Castelbajac plans to develop new items based on its sports business.

A Castelbajac representative stated, "We plan to expand related products soon, not only in golf wear but across the entire sportswear sector."