[The Next Generation of Management Begins: Blackyak Successor Expands "Separate Household" Operations]

Blackyak Accelerates Succession with Eldest Son Junseok Kang
Eldest Daughter Juyeon Kang Leads Dongjin Leisure
Outdoor Market Slump... Group's Core Business Sees Continued Decline

Junseok Kang, President of BYN Blackyak, has begun expanding his "separate household" operations. As the eldest son of Taeson Kang, Chairman of BYN Blackyak Group, President Kang executed a backdoor listing of Blackyak I&C, in which he is the largest shareholder, in the stock market in November last year. Recently, he accelerated the succession process by acquiring Hanju Chemical.

Last year, Chairman Kang appointed his eldest daughter, Juyeon Kang, as President of Dongjin Leisure, and entrusted BYN Blackyak to his second child, President Kang, bringing them to the forefront of management. However, equity succession has not yet taken place. In the fashion industry, there are expectations that President Junseok Kang will expand Blackyak I&C and absorb BYN Blackyak, the group's origin company, as a method of business succession.

According to the Financial Supervisory Service's electronic disclosure system on June 19, Blackyak I&C completed the acquisition of Hanju Chemical last month through its subsidiary ST Beta First (SPC). It secured 100% of the shares, with the acquisition amounting to 74.2 billion KRW. Hanju Chemical manufactures and sells fire extinguishing equipment.

Taeson Kang, Chairman of BYN Blackyak Group; Junseok Kang, President of BYN Blackyak Group; Juyeon Kang, President of Dongjin Leisure

Established in 2013, Blackyak I&C manufactures and sells industrial safety shoes, workwear, and industrial safety products. President Junseok Kang is the largest shareholder with a 65.15% stake, while his sister, Youngsoon Kang, holds 28.14%.

This company raised a total of 14.7 billion KRW in January this year by listing on the KOSDAQ market through a merger with Mirae Asset Vision SPAC No.1. The company announced that these funds would be used for a smart logistics center, entry into new businesses, and cash required for management activities. With the recent acquisition of Hanju Chemical, there is analysis that Chairman Taeson Kang’s equity succession process utilizing Blackyak I&C has entered full swing.

The most likely scenario is a merger between Blackyak I&C and BYN Blackyak. In this case, BYN Blackyak shareholders such as Chairman Taeson Kang, his wholly-owned company Dongjin Leisure, and his wife Heewol Kim would receive Blackyak I&C shares proportional to the merger ratio. The higher the corporate value of Blackyak I&C, where President Junseok Kang holds a large stake, the more advantageous it is for him.

For this reason, there is analysis that Blackyak I&C acquired Hanju Chemical to expand its corporate scale. Since its listing, Blackyak I&C’s stock price has fallen by about 30%, shrinking its market capitalization. Hanju Chemical recorded sales of 41.1 billion KRW and operating profit of 9.2 billion KRW last year. If Hanju Chemical’s sales are added to Blackyak I&C’s existing industrial safety products business, the company’s value could increase.

BYN Blackyak is majority-owned by Chairman Taeson Kang, who holds a 78.94% stake. He is followed by Dongjin Leisure (6.03%), which is 100% owned by Chairman Kang, and his wife Heewol Kim (5.83%). In 2023, Chairman Kang donated a 6.03% stake to Dongjin Leisure free of charge. Dongjin Leisure, managed by his eldest daughter Juyeon Kang, was established in 2010 through a spin-off of the brands "Mountia" and "Karrimor" from Blackyak.

President Junseok Kang, Poor Performance of "Now" Acquired in 2013

Blackyak I&C has shown an upward trend in performance. Last year, sales reached 37.7 billion KRW, a 34% increase from 28.1 billion KRW two years earlier. Operating profit rose from 5.4 billion KRW to 8.3 billion KRW, an increase of about 3 billion KRW. This was due to heightened awareness of industrial safety following the implementation of the Serious Accidents Punishment Act in 2022, and the launch of the new safety shoe brand "Works One" last year, which expanded the company’s presence in the mid-to-high-end market.

However, the core company BYN Blackyak has not managed to escape sluggishness due to the downturn in the outdoor market. President Junseok Kang currently oversees the "Management Strategy Division," which is responsible for the group’s core brand Blackyak, as well as internal operations and new business initiatives. After joining Blackyak in 2009, he worked in product planning, management planning, future strategy, global business, and future strategy divisions. During this time, the poor performance of Now International, a BYN Blackyak subsidiary acquired in 2013 (with a 58.33% stake), has been particularly painful.

This company operates the outdoor brand "Now," which has roots in the United States. At the time of acquisition, President Junseok Kang expressed his ambition to make it one of the top five outdoor brands in the global market. However, reality has been harsh. Since the acquisition, Now International has never posted meaningful profits. In 2014, Now International recorded sales of 4.9 billion KRW and a net loss of 3.7 billion KRW. Last year, sales fell to just 400 million KRW, and the net loss was 500 million KRW. Since 2022, Now International has been classified as an equity-method investment and reflected as non-operating profit or loss. Due to accumulated deficits, its book value has fallen to zero, and equity-method accounting has been suspended.

President Kang plans to continue business domestically (both online and offline) and in overseas markets such as North America and Europe, emphasizing the eco-friendly outdoor aspect. Recently, the product lineup has expanded from apparel to home products such as pajamas and socks. A BYN Blackyak representative stated, "We will continue to develop products and carry out marketing activities to deliver the group’s long-term vision of eco-friendly values to customers and society."

Outdoor Market Slump... Worsening Performance Across the Board

Another BYN Blackyak subsidiary, the coffee bean specialist Botanetworks, entered bankruptcy proceedings in June last year. The Beijing subsidiary (Beijing Blackyak Outdoor) is also accumulating losses. Last year, the Beijing subsidiary recorded sales of 24.2 billion KRW and a net loss of 1.4 billion KRW. Compared to 2019, when sales were 27.7 billion KRW and the net loss was 900 million KRW, performance has deteriorated further.

As a result, BYN Blackyak posted consolidated sales of 301.5 billion KRW and an operating loss of 2.5 billion KRW last year. Sales decreased by 10% compared to the same period the previous year, and operating profit turned to a loss. BYN Blackyak once achieved sales of about 580 billion KRW more than ten years ago, but in recent years has maintained sales at the 300 billion KRW level. In the early 2010s, the outdoor industry enjoyed a boom due to increased demand for hiking wear and heavy down jackets, but since 2014, excessive competition among brands and changes in consumer fashion trends have caused sales to plummet.

Especially after the COVID-19 pandemic, demand shifted to overseas brands such as "Arc'teryx," "Snow Peak," and "The North Face," which is cited as a reason for the negative growth of domestic outdoor companies. According to the fashion industry, the outdoor market, which was worth 7 trillion KRW in 2013, shrank to the 4 trillion KRW range last year.

The same is true for Dongjin Leisure, led by President Juyeon Kang. President Kang joined Dongjin Leisure’s trade team in 2002 to build practical experience and became CEO in 2020. However, after handing over the CEO position to her father, Chairman Taeson Kang, in 2021, she was reappointed as CEO last year. Since taking office, President Kang has focused on reviving Mountia, aiming to improve profitability through a single-brand strategy. However, it appears that performance has not improved significantly. Last year, Dongjin Leisure recorded sales of 40.3 billion KRW and operating profit of 2.3 billion KRW, down 6% and 17% respectively from the previous year.

Chairman Taeson Kang is 76 years old this year, but it is reported that he still comes to the office every day and meticulously manages overall operations. Notably, in February this year, he established K-Swiss Korea together with KP Global, which owns the global IP of K-Swiss. This is part of a plan to revive K-Swiss, which withdrew from the Korean market in 2022. Chairman Kang stated, "We will support K-Swiss so that it can once again establish a strong brand presence in Korea."