Amorepacific FY2023: Growth Japan, Americas, EMEA not enough to offset China decline

Amorepacific’s latest full-year results show that growth across multiple markets including the US was not enough to offset the slump in China, leaving its overseas business unit in the red.

On January 30, the South Korean beauty conglomerate revealed a significant operating profit loss in its overseas business unit in its 2023 financial year report.

The company reported an operating profit loss of KRW43.2bn (USD32.5m) while revenue decreased by 6% overall to KRW1.39tn (USD1.04bn).

The declines were mainly attributed to China, where revenues reported a decline of “mid-20%”, said the firm.

Its latest fourth-quarter report showed that China's revenues dropped by a whopping 40%.

China accounted for around 50% of Amorepacific’s overall business in Asia, excluding its home market.

The company attributed the overall revenue decrease to “brand renewals, restructuring of offline stores, and downsizing inventory in major channels.”​

Meanwhile, the company reported better results in other markets.

In Japan, revenue grew by 30% with strong growth observed in Laneige and Innisfree. The launches of Hera and Aestura also bolstered the growth.

South East Asian (SEA) market remained flat. In particular, Laneige saw strong sales of key products.

The overseas Asian markets excluding China saw operating profits increase.

Amorepacific also saw growth in the Western markets.

The Americas region grew by 58% as it strengthened its major brands through offline channel expansion and by enhancing product lineup.

In particular, the company highlighted the growth of Innisfree and Sulwhasoo as both expanded in multi-brand shops, reinforcing brand competitiveness in the market.

The K-beauty saw the biggest growth of 62% in Europe and the Middle East region (EMEA) through expansion into new markets.

The company reported that all brands achieving sales growth in the region.

The growth was attributed to brand expansions, such as Laneige’s launch in SpaceNK in the UK and Sephora in the Middle East.

Home market woes

Furthermore, Amorepacific reported that its domestic revenue declined by 14% to KRW 2.211tn (USD1.66bn) while operating profit decreased by 34% to KRW146.4bn (USD110.1m).

The declines were driven by the travel retail channel, which posted double-digit declines. Travel retail sales account for 20% of domestic revenue.

Meanwhile, performance in the multi-brand channel posted more than 40% growth.

Total online sales also declined by double-digits. However, the company noted that it had the largest market share in the cosmetics e-commerce space.

Domestically, its luxury division decreased by 16%.

This portfolio, which includes brands such as Sulwhasoo and Hera, accounts for 55% of total domestic revenue.

Similarly, its premium unit posted a 18% decline.

This accounts for brands such as Laneige, Iope, and Aestura. It makes up for 22% of domestic revenue.

Lastly, the daily beauty portfolio, which includes brands such as Ryo and Mise-en-Scene, dipped by 9%. It accounts for 17% of domestic revenue.