Amorepacific overseas sales surpass 2 trillion won despite poor performance in Europe

By Amanda Lim

- Last updated on GMT

Amorepacific overseas sales surpass 2 trillion won despite poor performance in Europe

Related tags Amorepacific

K-beauty behemoth Amorepacific saw its overseas sales hit KRW2.78tn (USD1.69b) for the first time as North American sales jumped 38% in FY2019.

Overall, the company recorded a 6% increase in sales to KRW5.58tn (USD4.72) and an 11% decrease in operating profit to KRW427.8bn (USD362m).

“Despite difficult business conditions, Amorepacific Group continued to make investment for its growth in the global market and as a result, its international sales surpassed KRW 2 trillion for the first time since its foundation,” ​said the company in a statement.

The jump was driven by the sales growth in North America and Asia.

North American sales amounted to KRW93bn (USD78.7m) thanks to the continued growth of Laneige, the Sephora US debut of Innisfree and Primera, as well as the launch of Innisfree in Canada.

Amorepacific said this growth ‘greatly contributed’ to its global sales.

In Asia, sales topped at KRW1.96tn ($1.65bn), up 5% from the year before. The firm attributed this to the ‘innovative’ product launches by its five global brands – Sulwhasoo, Laneige, Mamonde, Innisfree and Etude House.

The company also signed an MOU with ASEAN e-commerce platform, Lazada Group as part of efforts to boost its competitiveness in international retail channels.

Amorepacific’s uptick of sales in these regions were pulled down by its European portfolio due to the weak demand in the French market.

However, Laneige managed to establish a foothold for growth in the skin care market through its launch in European multi-brand shops.

Despite the performance in North America and Asia, overseas business reported a 49.7% drop in operating profit as increased marketing expense and investments in new markets and channels hit its bottom line.

Improving domestic market

The group recovered its performance domestically with sales up 5% and operating profit up 13%, driven by luxury sales, improved touchpoints, and the growth of its hair care products.

“In addition, the growth of online channel based on intensive investment in new brands including Be Ready, Rarekind and Bro & Tips, increased sales of major brands particularly in growing channels and efficient expense management contributed to the growth of operating profit.”

The stellar performance was wiped out by the decline of its European business, causing overall operating profit to fall.

Moving forward, Amorepacific said it would continue to diversify its channel portfolio particularly in the global market to better its performance in 2020

“Through diversified retail channels in Asian countries, [Amorepacific] will strengthen the market share of its existing brands,”​ it said.

Earlier in February, the firm entered into a business partnership agreement with PT Mitra Adiperkasa Tbk (MAP), the largest distributor in Indonesia.

MAP Group is a large Indonesian distribution company operating approximately 2,300 stores in 70 Indonesian cities.

Through this agreement, Amorepacific will expand Sulwhasoo, Laneige, Innisfree and Etude House to in Indonesian through MAP Group's retail channels.

It will also consider entering new channels in North America to continue the growth of its brands.

In order to strengthen its position in the European market, the firm said it would leverage multi-brand shops to “rebuild itself as a skin care powerhouse”.

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