Amore Pacific Sales and Operating Profit both Decline in Q1 of 2022
- Chaileedo Press
- Apr 30, 2022
- 3 min read
South Korean cosmetics giant Amore Pacific Group released its earnings for the first quarter of this year, showing sales and operating profits of $997 million and $136 million, down 9 percent and 13.4 percent, respectively YOY.
On April 28, Amore Pacific Group announced key figures for Q1 FY2022, with the Korean beauty giant reporting sales of $997 million, down 9% year-on-year, operating profit of $136 million, down 13.4% year-on-year, and net profit of $104 million, down 25.2% year-on-year.
The earnings report noted that domestic sales in Korea continued to account for the largest share of sales at 62.9%, down 9.9% year-over-year, while overseas sales fell 6.1%. In addition, in its fiscal 2021 earnings report, it noted that the Korean beauty giant's sales rose 8% to $4.26 billion in 2021, which ended on December 31 last year, while operating profit soared 136.4% to $286 million, with sales up 8% year-over-year to $4.2 billion and net profit of $240 million, a 1224% jump compared to 2020.
For the reason that its revenue decreased by 10%, Amore Pacific Group said pure domestic (Korean) revenue increased from strong online sales growth (over 20%) but travel retail revenue declined by double digit (24% of total revenue).
In the first quarter of 2022, group revenue in Asia fell 10% to $300 million due to revenue decline from the resurgence of COVID-19 and restructuring of offline stores.
Notably, in Asia, Amore Pacific's premium brand Sulwhasoo contributed accounting for 35% of its Luxury Subsidiary. Sulwhasoo strengthened representative anti-aging solution line of Sulwhasoo strengthened its representative anti-aging solution line of "Concentrated Ginseng Renewing Serum Ex, eye cream".
In its Premium Subsidiary, the online sales grew by double digit and continued strong growth with its brand Laneige accounting for 14%. Laneige nurtured the engine product category by renewing major products and launching limited editions including 9 products of "Water Bank Blue Hyalruronic" with innovative design and ingredients.
In its financial report in the fourth quarter of 2021, Amore Pacific noted that revenue in China declined by about 10% in won terms, but that sales of Sulwhasoo increased by more than 30%, with strong sales of the Sulwhasoo concentrated ginseng renewal line during the Double 11 period.
In its financial report in Q1 of 2022, China revenue declined by 10% in Korean won due to its offline sales decreased as some stores were temporarily closed for the resurgence of COVID-19 but Sulwhasoo sales grew by nurturing the "Concentrated Ginseng Renewing" line and solid growth from the online channel.
It is worth mentioning that in this financial report, its brand Innisfree achieved $56 million with a decrease of 19.3%. Innisfree reinforced high functional product category portfolio with Black Tea/Retinol Cica ampoule and the reason for revenue decline was sales Innisfree reinforced high functional product category with Black Tea/Retinol Cica ampoule and the reason revenue decline was sales in the travel retail channel.
At the beginning of this year, it was announced that Innisfree would be "withdrawing stores" in China, with the number of stores eventually shrinking to about 140. According to relevant information, at its peak, Innisfree had more than 600 stores in China. In other words, compared with the peak period, the withdrawal rate of stores was as high as 77% today.
In response to the news of store closures, the person in charge of Amore Pacific said that the group is optimizing the channels of the brand, and such store adjustments will continue in 2022. The person in charge also said that the Amore Pacific Group will make a new round of strategic adjustments for the Chinese market, but only for the optimization and reduction of the stores of Innisfree, not involving other brands.
As a matter of fact, Innisfree is not the first Amore Pacific brand to close a large number of stores in the Chinese market.
Etude, one of the group's brands, closed all its offline stores in China in March 2021, retaining only its offline beauty collection point, the "Colorist" channel, and switching to online operations. According to its official website, Etude entered the Chinese market in 2013, and at its peak, it had opened 58 directly-managed stores in 25 cities, including Beijing, Shanghai, Guangzhou and Wuhan.
However, the Group also has its own plan for its brand Innisfree and Etude. According to the Group’s news, Innisfree enhanced awareness of the high functional category through various collaborations with influencers(Na-yong Kim, Kangna, etc.) and launched “No-Sebum & Peanuts Edition”(IP collaboration). Etude released additional colors of “Fixing Tint”, a popular lip product within major multi brand shop channels and launched “Play Tone Eyes”, a joint production with Youtube influencer Jeyu and collaboration products with “Loacker” brand.
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