Amorepacific Group 2020 Annual Results

Sales of KRW 4.9 trillion and operating profit of KRW 150.7 billion
Targeting sales of KRW 5.6 trillion and operating profit of KRW 380 billion

In 2020, Amorepacific Group recorded KRW 4.9301 trillion in sales and KRW 150.7 billion in operating profit. These are declines in sales and in operating profit by 21.5% and 69.8%, respectively, year over year.

Last year, Amorepacific Group strongly mobilized to overcome both internal and external business risks in the aftermath of the COVID-19 outbreak. Social distancing measures were adopted in Korea and around the world, and as a result, the number of tourists plunged. Offline channels in particular experienced the gravest challenge. To overcome the situation, Amorepacific Group strengthened its digital marketing and tackled e-commerce channels, reaping significant results in online channels.

The overall operating profit in domestic business declined due to the decrease in sales from offline channels and one-time expenses, such as labor costs. However, sales from domestic online channels rose sharply thanks to increased collaboration with digital platforms and diversified marketing activities. Flagship products including the Sulwhasoo Concentrated Ginseng line, LANEIGE Neo Cushion, IOPE Retinol Expert, and Ryo Jayangyunmo recorded strong sales and enhanced brand competitiveness. New brands targeting premium market, such as SIENU and LABO-H, were launched, while new growth drivers such as CUBE ME, BRO&TiPS, and BE READY brands released a series of differentiated products.

The prolonged pandemic threatened overseas business, decreasing sales and operating profit. On the contrary, growth in online channels was clearly visible because the company carried out active digital marketing activities. Sulwhasoo led strong sales in large-scale online shopping events on the Singles’ Day and the 6.18 Shopping Festival in China. The group also established a foothold to take-off further by adding new product categories and bolstering channel portfolios. Meanwhile, Amorepacific Group focused on securing profitability and growth drivers by reorganizing offline channels and supplying products to multi-brand stores.

This year, Amorepacific Group plans to nurture robust brands, undergo digital transformation, and revamp the business system to achieve 5.6 trillion won in sales and 380 billion won in operating profit. To that end, the group will focus on growing ‘Engine products’ that reflect the innate values of Amorepacific brands and the spirit of the times. On the e-commerce front, the corporation aims to grow by more than 30% in sales. To achieve this goal, the group will bolster its partnerships with major platforms in and out of the country and augment various marketing capabilities including live commerce. Moreover, the corporation will overhaul the company structure to foster profitable growth and expand investment in new growth engines, such as functional foods and derma-cosmetics.

Major Beauty Affiliate Performance 2020

Amorepacific : Sales and operating profit dropped by 21% to KRW 4.4322 trillion, and by 67% to KRW 143 billion, respectively

The primary affiliate, Amorepacific, recorded sales of KRW 4.4322 trillion (-21%) and operating profit of KRW 143 billion (-67%). Domestic sales dropped 23% year over year to KRW 2.7064 trillion, and overseas business sales also decreased by 16% to KRW 1.7453 trillion.

Domestic business : KRW 2.7064 trillion (-23%) in sales, KRW 117.2 billion (-63%) in operating profit

In Korea, sales from offline channels, such as duty free stores, fell due to the sharp drop in foot traffic and the number of foreign tourists. Online sales, by contrast, rose by 50% year over year. This was made possible by becoming a vendor for digital channels, launching dedicated online brands, and increasing live commerce.

Offline sales for luxury brands fell because of COVID-19 and the restructuring of sales channels. However, as the company increased its collaborations with digital platforms, online sales soared. Sulwhasoo placed an all-out effort to nurture high-performance skincare lines, such as First Care Activating Serum and Concentrated Ginseng, to strengthen its high-end brand equity. Hera broadened its lip and face make-up portfolio to expand its customer base, while Vital Beautie responded to the needs of the customers by focusing on the inner beauty market. Amorepacific brand portfolio expanded with the launch of the new brand, SIENU.

Offline sales decreased even for premium brands, but diverse digital marketing activities drove growth in online sales. Customer touch points were also diversified as the company broaden customer experience at each channel. The new product, Neo Cushion, by Laneige started a boom, exceeding 13 billion won in sales. Phyto-alexin released through crowdfunding became a buzzword further proving the brand power. IOPE, a winner of CES Innovation Awards for 3D masks, enhanced the brand image by introducing numerous new products, including a laboratory-based high-performance skincare product Retinol Expert 0.1%. New growth-driving brands such as CUBE ME, BRO&TiPS, BE READY, and Holitual showcased new products that reflected customer demands, leading the sales increase.

As for daily beauty brands, mise en scène, HAPPY BATH, and Illiyoon drove the overall increase in sales, while online sales grew markedly with reinforced digital marketing. The company also managed to boost sales by concentrating its marketing efforts on key products including Ryo Jayangyunmo, mise en scène Hello Bubble, HAPPY BATH Micro Micellar, and Illiyoon Ceramide Ato. A scalp care brand LABO-H and Skin U, a new line from HAPPY BATH, helped bolster the premium brand portfolio.

(Major products released in 2020: Sulwhasoo Concentrated Ginseng Ampoule, Sulwhasoo Timetreasure Honorstige line, HERA Youth Activating Cell Serum, HERA Sensual Spicy Nude line, HERA Glow Lasting Foundation, HERA Glow Lasting Cushion, Vital Beautie Green Tea Lactobacillus, Vital Beautie Meta Green Slim, Primera Clean & Safe Sanitizer Gel, makeon LED Patch, LANEIGE Neo Cushion, LANEIGE Phyto-alexin, Mamonde Blue Camomile Soothing Repair Cream, IOPE Retinol Expert 0.1%, HAPPY BATH V-Protect line, HAPPY BATH Skin U, mise en scène Salon Plus Clinic 10, BE READY Magnetic Fitting Cushion, BRO&TiPS Point Clinic, FILLVOID Perfumed Hand wash Prime Editions, Holitual Micro Balancing Essence, Steady Sleep Nutrient Mask, etc.)
Overseas business : KRW 1.7453 trillion (-16%) in sales, KRW 17.9 billion (-83%) in operating profit

The global outbreak of COVID-19 in 2020 resulted in the general decline of Amorepacific’s overseas business. Nevertheless, online sales expanded thanks to affiliations and collaborations with various platforms and e-commerce channels.

Business in Asia recorded sales of KRW 1.6497 trillion, down 16% year over year. Despite the dire circumstances, Amorepacific sought to target Chinese and Southeast Asian markets, focusing on its flagship global brands.

In China, large-scale online shopping events, such as the 6.18 Shopping Festival, Tmall Super Brand Day, and the Singles’ Day, recorded high sales growth, an encouraging signal for the company. Sulwhasoo was introduced through Shopee in Southeast Asia and Nykaa in India, while HERA entered Sephora.com in Singapore, proactively expanding its presence in the global e-commerce market. LANEIGE stepped up its innovative product category by introducing Radian-C Cream and the Perfect Renew line. Mamonde launched the renewed Age Control line and expanded its presence in social and live commerce to attract new customers. innisfree launched Black Tea Ampoule in China, enhancing the high-performance lineup, and revamped its offline channel portfolio in Greater China. At the same time, Etude laid the foundation for strong profit growth by streamlining offline channels in major Asian countries.

North America business recorded sales of 76.6 billion won (-18%). Although sales dropped due to the decrease in offline demand and streamlining of innisfree stores, e-commerce sales for major brands showed solid growth, bringing about meaningful results. Sulwhasoo entered the online and offline channels for Sephora US and released a dedicated product, LANEIGE Lip Sleeping Mask X Netflix in an effort to diversify channel strategy by adapting to the changing market.

Business in Europe recorded sales of 19 billion won (-13%). Overall sales decreased due to the closure of major offline stores as well as Sulwhasoo stores in department store. However, sales of LANEIGE brand increased thanks to the strong performance of Lip Sleeping Mask in online and multi-brand shops.

innisfree : Sales and operating profit dropped by 37% to KRW 348.6 billion, and by 89% to KRW 7 billion, respectively

innisfree recorded KRW 348.6 billion (-37%) in sales and KRW 7 billion (89%) in operating profit. Reducing the number of offline stores coupled with the pandemic led to a decrease in both sales and operating profits. On the other hand, online channels showed robust growth through strategic collaborations with digital platforms. It also strengthened its leadership in the functional skin care category by releasing functional products, such as Brightening Pore Serum and Black Tea Youth Enhancing.
(Major products released in 2020: Brightening Pore Serum, Truecare Vitamin C20 Ampoule, No Sebum X Mentos Edition, Black Tea Youth Enhancing, Ugly Carrot Hand line, My Color Palette, My Twinkle, etc.)

ETUDE : Sales dropped by 38% to KRW 111.3 billion, reduced deficit in operating profit

ETUDE recorded sales of 111.3 billion won (-38%). The overall sales decreased as offline sales fell due to COVID-19 and the streamlining of stores. The deficit narrowed though thanks to business restructuring with an emphasis on profit and loss by, for example, reducing manufacturing costs. The brand tackled online channels and released a product exclusive for Kakao Talk’s Gift feature, Birthday Bread Eye Palette Oven Kit. The company also entered the multi-brand shop channel to diversify the point of contact with customers and introduced collaborative products, including Play Color Eyes Mini HERSHEY, to further enhance the brand image.
(Major products released in 2020: Play Color Eyes Mini HERSHEY, Powder Rouge Tint HERSHEY, Play Color Eyes Rose Wine, Disney Awesome Party Collection, Muhly Romance Collection, Glass Rouge Tint, etc.)

eSpoir : Sales dropped by 9% to KRW 42.5 billion, turn a loss in operating profit

eSpoir recorded sales of 42.5 billion won (-9%). Sales fell because the number of eSpoir stores decreased and thus fewer customers visited the brick and mortar stores. Increased marketing costs also put the company into the red. Active efforts in digital marketing, such as the launch of Couture Lip Fluid Velvet Ruby Kakao Collection, an exclusive offer at Kakao Talk Gift feature, drove an increase in online sales. The company also enhanced the lip and face make-up categories by releasing Red Meets Yellow and Taping Cover Moist Cushion.

AESTURA : Sales and operating profit dropped by 11% to KRW 99 billion, and by 94% to KRW 400 million, respectively

AESTURA recorded KRW 99 billion (-11%) in sales and KRW 400 million (-94%) in operating profit. Despite strong sales in online channels, sales for inner beauty category dropped, resulting in a decrease in overall earnings. Nevertheless, AESTURA has been awarded the Grand Prize for the Brand of the Year for five consecutive years, and the brand secured more customers among hospitals and clinics, enhancing its competitiveness. AESTURA also launched a new product, A-CICA Stress Relief Cream-Essence, and stepped up promotion for a flagship product, Atobarrier 365 Cream, to gain a basis for growth in multi-brand shop channels.

Amos professional : Sales and operating profit dropped by 19% to KRW 67.9 billion, and by 15% to KRW 14.3 billion, respectively

Amos professional recorded KRW 67.9 billion (-19%) in sales and KRW 14.3 billion (-15%) in operating profit. Sales and operating profit both decreased because fewer customers visited the salons due to COVID-19. The brand turned to ‘The AYUNCHE’, a digital solution platform for hair designer customers, and bolstered online marketing by expanding digital contents. It also released exclusive products, including Repair Cica line for salons and the renewed Green Tea Active Shampoo for Amos professional stores, thereby improving the product competitiveness.