AmorePacific reports sales increase, profit slump


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AmorePacific reports sales increase, profit slump

Related tags Marketing Amorepacific

South Korean cosmetics company AmorePacific has reported a decrease in Q3 profits as a result of poor overseas markets and investment and marketing activities for new products.

A release from November shows that overall, sales increased by 8.8% while operating profit decreased by 5.6%, putting the company quite a long way behind its performance from the same quarter last year.

Despite solid retail performance, the company’s overall profitability was affected by various factors, including high investment and extensive marketing pushes in a number of different overseas markets, decreased door-to-door sales and the poor performance of its mass cosmetics division.

Amorepacific commented on the positive and negative aspects of the quarter, highlighting: Solid sales growth in a depressed market delivered by strengthened distribution portfolio and products responding to the customer needs and expansion of overseas business.”

On the other hand, the company also reported: “Decreased OP due to the slowdown in Door-to-door channel, increase in expenses caused by the construction of new infrastructures and expansion of overseas markets.”

A year of decreased operating profit

These poor results follow the trend in 2013 for AmorePacific to increase sales while losing out in term of operating profit, a pattern which also occurred in the company’s first two quarters.

It compares unfavorably with the firm’s performance in the same quarter last year, where strong sales were combined with an operating profit increase of 18%.

The company’s mass cosmetics business and Sulloc division were particularly badly affected, reporting a tiny increase in sales combined with a total profit decrease of 14.8%.

However, there were some bright points in this area, with “solid growth” ​in the Ryoe and Happy Bath brands thanks to increased sales and new product launches.

Growth in Asia, losses in Europe

The company’s overseas division also posted an improvement on performance from the previous year, reducing its operating profit loss from 6.4% to 2.8% and reporting impressive growth in several geographic regions.

Asia was a particularly strong region for Amorepacific, with impressive triple-digit growth in Thailand thanks to newly opened stores and increased sales. Singapore and Malaysia also posted strong growth on the back of expansion of department stores.

France was a region in which the company’s operating profit fell, due to marketing activities related to a new product launch. In the US, operating losses fell and solid growth was reported.

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