- Amorepacific Group Q1 2020 Earnings, Sales of KRW 1.2793 trillion and an operating profit of KRW 67.9 billion
- The coronavirus outbreak has resulted in the contraction of global beauty markets
- Getting ready for a new leap forward through a highly potent digital channel and personalized beauty solution
Amorepacific Group recorded KRW 1.2793 trillion (-22%) in sales and KRW 67.9 billion (-67%) in operating profit in Q1 2020. In the face of COVID-19, Amorepacific Group discovered the potential of the digital channel and built a springboard for their next leap through digital transformation and the development of personalized cosmetic technology.
Despite operating profit dropping due to decreased sales in major offline channels including TR and department store channels, Amorepacific Group has continued to release new products to enhance brand competitiveness. With Tailored 3D Mask technology, Amorepacific Group received the CES 2020 Innovation Award and further ramped up its effort to take the lead in the coming age of personalized beauty and create a new customer experience, which in turn will provide special value to customers.
With the launch of SIENU, its first brand in collaboration with a leading duty free operator, Amorepacific Group strengthened its luxury brand portfolio. It also introduced new brands including HOLITUAL, FILLVOID and LABO-H in response to specific customer needs.
Both sales and operating profit of eSpoir increased with its expansion into multi-brand shop channel and higher sales of face makeup products.
In global business, both sales and operating profit decreased as COVID-19 weighed heavily on the market. Amorepacific Group, However, newly released Sulwhasoo Bloomstay Vitalizing Eye Cream in China and Sulwhasoo Timetreasure Honorstige in Thailand to secure its competitive position in the anti-aging category. Online sales increased through a variety of brand activities via Chinese Tmall. innisfree successfully made its debut in the Middle Eastern market and expanded its customer touchpoints with the opening of its first shop in the UAE. In the North American market, LANEIGE and innisfree put up a good show, particularly in multi-brand shop and online channels. The release of exclusive products including LANEIGE Lip Sleeping Mask X Netflix helped contribute to sales growth in North America.
Despite the impact of the COVID-19 crisis, Amorepacific Group has managed to secure a competitive advantage in the digital channel and lay the groundwork for future growth. Furthermore, the group plans to diversify its channel portfolio in the global market, develop personalized beauty solution and technology and drive digital transformation for even better performance in 2020.
Business Performance of Major Beauty Affiliates in Q1 2020
Amorepacific : Sales decreased to KRW 1.1309 trillion (-22%) and operating profit decreased to KRW 60.9 billion (-67%)
The main affiliate Amorepacific recorded KRW 1.1309 trillion in sales (-22%) and KRW 60.9 billion (-67%) in operating profit. Though domestic online sales increased by over 80%, sales in offline channels including TR, department stores and roadside shops decreased due to the COVID-19 outbreak and consequently, operating profit declined. Domestic business recorded KRW 760.8 billion in sales (-19%) and Global business recorded KRW 373.9 billion in sales (-28%).
Domestic business : KRW 760.8 billion in sales (-19%) and KRW 86.6 billion in operating profit (-33%)
Luxury brands saw decreased sales in their main offline channels including TR, department store and door-to-door sales but online sales went up by over 80%. Premium brands also expanded into new online and multi-brand shop channels in an effort to minimize the impact of COVID-19.
The launch of SIENU, the first brand in collaboration with a leading duty free operator, enhanced its luxury brand portfolio along with a series of new innovative brands including esthetic therapy brand HOLITUAL, high-end body care brand FILLVOID and scalp care brand LABO-H in response to the specific needs of customers. Increased sales of daily brands were driven by mise-en-scene hair dye, body wash and cleansing products from HAPPY BATH and Illiyoon moisturizers.
Recognized as a CES 2020 Innovation Honoree, Tailored 3D Mask is expected to push IOPE to the forefront of personalized beauty. (The tailored beauty service in the Myeongdong IOPE Flagship Store will open in May) (New products released in Q1 2020 include Sulwhasoo Timetreasure Honorstige, Sulwhasoo Bloomstay Vitalizing Eye Cream, HERA GLOW LASTING FOUNDATION, Vitalbeautie Greentea Probiotics and the new brands SIENU, HOLITUAL, FILLVOID and LABO-H)
Global business : KRW 373.9 billion in sales (-28%) with operating profit turning negative
In Asia, sales went down to KRW 345.6 billion with an year-on-year decrease of 31%. Leading global brands (Sulwhasoo, LANEIGE, Mamonde, innisfree and ETUDE) introduced various innovative products while Mamonde entered the Chinese and Malaysian multi-brand shop channel. Through promotional campaigns in the Chinese online channel including Sulwhasoo X Tmall Heybox event, Women's Day event(March 8), online sales of luxury brands increased by over 50%. LANEIGE also saw continued support from local customers via the Tmall Super Brand Day campaign. innisfree also entered the Middle Eastern market with the opening of its first shop in the UAE thus laying the groundwork for qualitative growth in the Asian market.
In North America, sales increased by 26% to KRW 23 billion and in particular, LANEIGE and innisfree recorded increased sales via online and multi-brand shop channels. The Sephora exclusive LANEIGE Lip Sleeping Mask X Netflix added to the brand's appeal and Sulwhasoo entered Sephora US to further improve interactions with customers.
In Europe, total reported sales decreased by 7% to KRW 5.4 billion as main shops closed and demand declined amid COVID-19.
innisfree : KRW 107.4 billion in sales (-31%) and KRW 5.1 billion in operating profit (-76%)
innisfree recorded KRW 107.4 billion in sales (-31%) and KRW 5.1 billion in operating profit (-76%) in Q1 2020. The COVID-19 outbreak reduced sales in roadside shops and TR channels with the exception of the online channel. Despite the difficult conditions, the brand released functional products to improve its image as a highly functional naturalism beauty brand and strengthen its competitive advantage. It is currently working on new strategies to tighten strategic partnerships with online platforms and streamline offline channel operation. (New products released in Q1 2020 include Brightening Pore Serum)
ETUDE : KRW 34.6 billion in sales (-31%) with deficit reduced
ETUDE reduced the size of its deficit in operating sales with sales of KRW 34.6 billion (-31%) in Q1 2020. It also had poor sales in roadside shops and TR channel but through expansion into multi-brand shops and collaboration with digital platforms, overall sales increased. It enhanced its competitive positioning with the release of collaboration editions, improved its sales growth and manufacturing cost along the closing of some shops and as a result, narrowed the deficit. (New products released in Q1 2020 include: Play Color Eyes Mini Hershey and Powder Rouge Tint Hershey)
eSpoir : KRW 13.8 billion in sales (+20%) with increased operating profit
eSpoir reported sales of KRW 13.8 billion (+20%) and operating profit of KRW 1.8 billion in Q1 2020. Expansion into multi-brand shop channel and enhanced touchpoints boosted sales growth. It reduced the number of directly managed stores for efficient expense management, which contributed to increased operating profit. The release of new differentiated makeup products including Red Meets Yellow, No Wear Chiffon Matte and Pro Tailor Foundation Be Silk enhanced its competitiveness as a professional makeup brand.
AESTURA : KRW 24 billion in sales (-13%) and KRW 1.6 billion in operating profit (-42%)
AESTURA recorded KRW 24 billion in sales (-13%) and KRW 1.6 billion in operating profit (-42%) in Q1 2020. Though sales increased in multi-brand shops and hospitals/clinics, decline of inner beauty products sales led to overall sales and operating profit decreased. Through the pop-up AESTURA 365 Skin Moisturizing Haven in Amore Seongsu, the brand was able to diversify the elements of brand experience and raise its profile.
AMOS PROFESSIONAL : KRW 18.7 billion in sales (-24%) and KRW 4.4 billion in operating profit (-21%)
AMOS PROFESSIONAL recorded KRW 18.7 billion in sales (-24%) and KRW 4.4 billion in operating profit (-21%). Decreased sales in hair salons led to a decline in operating profit. However, its star product, Feel The Green Tea, was named the winner of Prix d'Excellence de la Beaute 2020, annual beauty awards of Marie Claire thus proving the high quality of its products. It also diversified its product portfolio with a new functional product, Pure Smart Shampoo Fresh.