Enrich and rebuild: LG H&H aims to reinforce luxury beauty unit to drive future growth

During the firm’s first quarter (Q1) earnings presentation, CEO Lee Jung Ae highlighted its key business strategies.

This included plans to “enrich”​ the product line-up of History of Whoo, the firm’s flagship luxury brand, which accounts for over half (54%) of beauty sales. It also saw the need to “rebuild​” its skin care brands Su:m37 and OHUI.

Most recently, the Su:m37 launched its new MicroActive range, which contains True Active, an ingredient made from 10 years of fermentation.

By reinforcing its key luxury beauty brands, which account of 77% of total beauty sales, the company aims to improve its competitiveness in China, which have been sluggish in recent months.

In Q1, the company’s beauty business recorded a double-digit drop in China sales excluding travel retail. Overall, the company’s sales in China dropped 14.1%to KRW193bn (USD144m).

Additionally, the company has observed opportunities the clean and derma beauty categories, as well as in the indie beauty sector.

Previously, in her New Year’s message, Lee highlighted the need to ensure the longevity of LG H&H’s brands, emphasising that they needed to be the ones consumers “continued to look for in the next five to 10 years.”​

To do so, Lee said the company would have to question the uniqueness of its product developments. “I will encourage new and fresh attempts to actively take place in line with changes in the market and customers and I will highly value them.”​

Lee added: “In order to support new and colourful ideas and lead them to business results, we are not negligent in equipping the authenticity of the brand with high-quality products, such as practical efficacy and value that customers can experience, and packaging that captures customer sensibility and convenience. It is difficult, but it is something that must be done stubbornly without compromise.”​

Overseas opportunities

Moving forward, Lee highlighted the need to reinforce its business in North America, where it saw sales growth of 21.1% to KRW136bn in Q1.

Additionally, the firm is aiming to expand its online and offline distribution network in Japan and South East Asia (SEA).

In Q1, the company recorded 2.4% sales growth to KRW1.7tn (USD1.26bn) but sale operating profit decrease by 16.9% to KRW146bn (USD108.9m). The beauty business reported sales increase by 0.3% to KRW702bn but operating profit dropped 11.3% to KRW61bn (USD45.5m).

Overseas sales, which account for 30% of the oversales, decreased 1.7% year-on-year to KRW500bn won.

The company announced the appointment of Lee at the end of last year, taking over from Cha Seok-yong, who led the company for 18 years.

Lee joined LG H&H in 1986 has over the years served as the head of several units in the firm, including household goods, luxury cosmetics, and refreshment divisions.

At the start of the year, Lee highlighted aspirations for the company to “leap forward”​ as a global luxury beauty company. “The expansion of the overseas business must be continued and strengthened,”​ she said.