- Sales were down 25% to KRW 1.2 trillion; Operating profit was down 67% to KRW 36.2 billion
- The group is focusing on digital operations, customization, and innovation to improve 2H performance
Amorepacific Group recorded KRW 1.2 trillion in sales (down 25% year-on-year) and KRW 36.2 billion in operating profit (down 67% year-on-year) in the second quarter of 2020.
Amidst sluggish demand in both domestic and overseas markets due to COVID-19, the group concentrated on driving online sales by strengthening digital platforms, while stimulating marketing efforts with innovative and eco-friendly new products geared towards millennial consumers.
The group also continues to look to new business ventures, such as customized cosmetics, for growth and to prepare for the post-COVID19 era. In the second quarter, it opened IOPE LAB in one of Seoul’s busiest shopping districts, and entered into a new partnership with Australia’s Rationale Group. IOPE Lab offers personalized cosmetic services, and Rationale Group has been an early leader in the customized cosmetics category.
In Korea, sales and operating profits in offline channels such as travel retail, department stores and road shops were down due to COVID-19 and channel reorganization. To balance that, Amorepacific Group has actively expanded its presence on online platforms while offering channel-exclusive products to further drive online sales. Of note, online sales of cleansers and other similar daily use products grew at a stable pace.
Overseas sales and operating profits were down due to COVID-19 in both North America and Europe, where offline shops did not begin reopening until June. However, these markets did see an increase in online sales due to strong digital marketing efforts, while luxury brands worked hard to improve their presence in new channels such as multi-brand stores and increase sales online.
Amorepacific Group will continue to improve performance in the second half of this year by focusing on digital platforms, customized cosmetics technologies, and with innovative products that captivate consumers around the world. Please see below for detailed breakdowns of business performance and activities by main group affiliates.
Q2 2020 business performance of main group affiliates
Amorepacific : Overall sales decreased by 24% to KRW 1,055.7 billion, while operating profit declined by 60% to KRW 35.2 billion.
Sales in online Korean channels rose by 60%, but offline sales in travel retail, department stores, and road shops dropped due to COVID-19 and the reorganization of sales channels.
In Korea, sales were down 26% to KRW 656.7 billion YoY, while overseas sales declined by 21% to KRW 405.4 billion.
Market performance in Korea : Sales reached KRW 656.7 billion (-26%) and operating profit KRW 50.6 billion (-31%)
Sales of the company’s luxury brands in primary offline channels such as travel retail, department stores and door-to-door were down, while online sales increased by 80% as all brands responded to the new operating environment by strengthening their presence in platform stores, launching new and exclusive products within their respective categories, and expanding consumer touchpoints with new hygiene and healthcare products.
Premium brands also expanded their touchpoints online and in multi-brand shops. Innovative new products, such as IOPE’s Tailored 3D Mask and LANEIGE’s Neo Cushion were received positively by consumers. Sales from Amorepacific’s internal startups such as CUBE ME and Bro & Tips also began to gain traction, showing their potential to become new growth engines capable of reaching younger customers with wit and charm. Similarly, Amorepacific launched a new brand exclusively available online called the Enough Project.
Among daily beauty brands, sales of Ryo, Mise-en-Scène and HAPPY BATH grew solidly, supported by new products in the cleanser and hair dye category and enhanced sales performance in digital channels.
Amorepacific also launched a new customized cosmetics service called IOPE LAB in Seoul’s downtown Myeongdong shopping district, and entered into a new business partnership with Australia’s Rationale Group to secure customized cosmetics technology leadership to boost sales in Korea and overseas.
(Key new products launched in Q2: Sulwhasoo ‘Perfecting Makeup Line,’ HERA ‘I GLOW ME Collection,’ primera ‘Clean and Safe Sanitizer Gel,’ VITAL BEAUTIE ‘Meta Green Slim,’ VITAL BEAUTIE ‘Ginseng Extract Ampoule,’ LANEIGE ‘Neo Cushion,’ LANEIGE ‘Cream Skin Homme,’ Mamonde ‘Blue Chamomile Soothing Repair Cream,’ HAPPY BATH ‘V Project Line,’ and a new brand called ‘ENOUGH-PROJECT’)
Market performance overseas : Sales reached KRW 405.4 billion (-21%)
In Asia, sales declined by 20% YoY to KRW 388.5 billion. Luxury brands worked to expand sales in online channels while strengthening their offerings in new channels like multi-brand shops. In China, Sulwhasoo’s anti-aging skincare products such as ‘Concentrated Ginseng Renewing Serum’ sold very well at a June 18 shopping event, and T-mall sales were up more than 140%. With a solid performance by Sulwhasoo online, sales of luxury brands in China overall for the second quarter increased more than 70%.
In ASEAN, LANEIGE participated in the Lazada Super Brand Day and expanded customer marketing, while Mamonde attracted new customers with a digital campaign targeting Muslim customers in the region. IOPE and Mamonde boosted exclusivity by streamlining the number of Chinese department stores where the brands are sold, while LANEIGE and Mamonde strengthened their presence in multi-brand shops throughout the ASEAN region.
ETUDE also aimed for improved profitability by streamlining offline channels across Asia, while also launching a new product called Hershey’s Collection globally. The collaboration was warmly received by consumers.
In North America, sales decreased 36% to KRW 13.9 billion, while in Europe sales were down 38% to KRW 3.0 billion.
innisfree : Sales decreased by 40% to KRW 88.4 billion.
Sales of innisfree products amounted to KRW 88.4 billion (-40%) and its operating profit went into deficit in the second quarter. The brand ran a new global marketing campaign with the hashtag #Hydrocket for its bestseller Green Tea Seed Serum. It also began sales in multi-brand shops in Hong Kong and launched a product exclusively for digital channels called Truecare Vitamin C20 Ampoule. Online sales growth was robust, as the brand actively reinforced its leadership in the functional category with two key high-potency products, Brightening Pore Serum and Jeju Cherry Blossom Tone-up Cream.
(Key new products of the second quarter: ‘Truecare Vitamin C20 Ampoule, ‘No Sebum X Mentos Edition,’ etc.)
ETUDE : Sales decreased by 35% to KRW 29.6 billion, and deficits were reduced.
ETUDE also streamlined road shops and boosted sales online through strategic alliances and exclusive pre-launching of new products. Along with improved manufacturing costs, the brand reduced its operating loss in the second quarter.
(Key new products of the second quarter: ‘Play Color Eyes Rose Wine’, ‘Disney Awesome Party Collection,’ etc.)
eSpoir : Sales decreased by 11% to KRW 10.9 billion.
Operating profits turned to a loss due to increased marketing expenses. Total sales were affected by a reduction in the number of directly-managed stores. However, while offline sales decreased, online sales sharply increased due to the expansion of its platform, aggressive digital marketing, and through the introduction of new colors for product lines such as Taping Cover Moist Cushion and Couture Lip Fluid Velvet.
AESTURA : Sales decreased by 26% to KRW 27.4 billion, and operating profit declined by 53% to KRW 2.3 billion.
AESTURA’s online sales increased, owing to strong performance by its Atobarrier 365 Line, but as sales of inner beauty products decreased, overall sales and operating profit declined. The brand continued its digital marketing efforts with influencers and social media to boost its image.
AMOS PROFESSIONAL : Sales decreased by 20% to KRW 17.1 billion, and operating profit declined by 4% to KRW 3.9 billion.
The decreases were a direct result of a drop in customers visiting salons during the pandemic. To mitigate this, the brand is renewing its Green Tea Active Shampoo, a product exclusively for dealers, and expanding sales through reverse overseas direct purchasing.