Zinus Struggles in Q3 Due to U.S. Tariffs... "Price Increase Impact to Be Seen from Q4"

Third-Quarter Sales at 241.7 Billion Won, Down 11.6% Year-on-Year
Mattress Supply Prices Raised in October
Cambodia Factory Operations Underway, Stabilization Expected Next Year

Zinus reported disappointing results for the third quarter, impacted by increased U.S. tariffs. However, the company expects profitability to improve starting next year, as it raised mattress supply prices last month and began full-scale operations at its Cambodia factory.

On November 3, Zinus announced that its consolidated sales for the third quarter of this year reached 241.7 billion won, an 11.4% decrease compared to the same period last year. Sales in the United States, its largest market, fell by 17.3% to 182.4 billion won, leading to an overall contraction in performance. Both mattress and non-mattress product sales declined. The company posted an operating loss of 7.8 billion won, turning to a loss from last year’s operating profit of 11.9 billion won.

The gross profit margin was recorded at 26.3%, down 3 percentage points from the same period last year. This was due to the impact of increased tariffs being reflected in the results, as well as a heavier fixed cost burden resulting from decreased sales.

A Zinus representative explained, "The increased tariffs on products bound for the United States were reflected starting in the third quarter, but the corresponding price increases only took effect in October and were not included in third-quarter results. In the fourth quarter, the impact of tariffs will be mitigated and profit margins are expected to improve."

The Cambodia factory, which began operations in August, is currently in the ramp-up phase, with a third-quarter utilization rate of 13.5%. A company official stated, "This year, we plan to ramp up to a 70% utilization rate. We expect production to stabilize at a 90% utilization rate in the second half of next year."

Previously, in the second quarter, the confirmation of U.S. tariff rates for Zinus’s mattress production base in Indonesia resolved uncertainties and raised expectations for a rebound. However, after the tariffs were imposed, clients adjusted their orders more conservatively, which hindered the recovery in performance.

Nevertheless, Zinus views the current poor results as a temporary phenomenon, as the increase in mattress supply prices has eased the tariff burden. The company expects consumers to adapt to the new prices within about three months and forecasts a full-scale sales recovery starting in the first half of next year.

The company added, "We are continuously working to improve our cost structure and normalize inventory assets by expanding new ODM orders and enhancing operational efficiency. By focusing on R&D innovation, we aim to turn the current crisis into an opportunity for renewed growth."