Bouncing back: Strong demand for luxury beauty drives Amorepacific’s COVID-19 recovery

The company behind K-beauty brands Laniege, Innisfree and Sulwhasoo started to see its numbers improve in the first quarter of 2021.

In the first half of this year, the company recorded that its revenue was up 11.1% to KRW2.4tn, while its operating profit rocketed by 178.1% up to KRW267.5bn (U$233.1m).

Contrastly, Amorepacific reported that its revenue and operating profit plummeted by 23.1% and 65% respectively in the first half of last year.

The group said earnings were led by sales of cosmetics products through online channels, especially luxury products, which includes brands such as Sulwhasoo, Amorepacific and Hera.

In its home market, the luxury division grew by 18% in the second quarter.

The growth was driven by the company’s focus on its online channels, which posted strong growth as the firm invested in optimising its digital market and strengthen its relationship with digital platforms.

This aided the launch of new products and the renewal of key products.

Additionally, the company focused efforts on reinforcing the image of its luxury brands through initiatives such as brand marketing campaigns.

According to the firm, its luxury brands now account for 53% of its total domestic revenue. Sulwhasoo sales made up 36% of that figure.

Outside of Korea, growth was also driven by its luxury beauty brands,

In China, sales of luxury products online grew by approximately 100% while Sulwhasoo sales grew by 60%. This help to offset the sales decline of Innisfree, which fell by 20% due to store restructuring.

China’s sales account for more than 70% of the whole Asian region.

Sulwhasoo also experienced major success in other parts of Asia. In South East Asia, the brand’s growth exceeded 60% due to the strengthening of its marketing.

Overall, revenue in Asia grew by 8%.

Over in North America, Sulwhasoo also posted strong growth with retail partner Sephora with the growing popularity of its First care Activating Serum.

Aside from Sulwhasoo, brands such as Innisfree and Laneige performed relatively well, growing by double digital in SEA.

In Europe, Amorepacific saw a sales increase for all of its brands, including Innisfree and Laneige, which was recently launched with beauty e-tailer Cult Beauty.

Overall, its overseas revenue was up 14.5% and operating profit turned to profit in the first half. On the other hand, domestic revenue recorded 9.7% growth, with operating profit up 51.2%.

Growth continues in second quarter​

In the second quarter, revenue continued to grow by 11.5% while operating profit grew by 158.9% to KRW91.2bn (U$79.4m).

Its overseas business returned to profit while domestic operating profit grew by 62.3%.

This was driven largely by online sales growth in the second quarter, which grew by approximately by 40%.

The firm’s traditional retail revenues showed decline but noted that the rate of decline had narrowed.

However, the firm’s daily beauty division, which consists of brands such as Ryo, Illiyoon and Mise-en-Scene, experienced an 8% decline despite the growth of online sales.

Amorepacific said the decline was due to its increase in marketing expenses for newly launched product lines.