Patchy performance: Amorepacific Q2 revenues hampered by domestic sluggishness

Amorepacific reported on July 26 that revenue dipped slightly by 0.04% to KRW945.4bn (USD983m) while operating profit rose by 0.4% to KRW5.9bn (USD4.6m)

The flat performance was attributed to domestic revenues, which declined by 11.6%.

The luxury division, which consists of brands like Sulwhasoo and Hera fell by 12% in the domestic market.

Its premium portfolio, with brands such as Laniege, Mamonde, and Iope, fell by 24% domestically.

Lastly, the daily beauty division, which consists of personal care brands like LABO-H, Ryo, and Illiyoon.

Luxury, premium and daily beauty divisions account for 54%, 21%, and 17% of Amorepacific’s total domestic revenue.

Amorepacific fared better overseas with China revenue up more than 20% in local currency while Japan reported more than 30% growth.

North America doubled its revenue with growth across Sulwhasoo, Laniege, and Innisfree.

Europe also reported a revenue increase with Laneige entering Space NK in the UK and Sephora in the Middle East.

However, sales in the ASEAN markets were flat as e-commerce growth slowed.

Sulwhasoo facelift

Amorepacific also reported some highlights of Sulwhasoo’s rebranding efforts.

The flagship brand underwent a refresh starting last year to boost its brand equity.

It launched a new campaign, #Sulwhasoo Rebloom, updated its packaging designs, and also tapped Oscar-winner Tilda Swinton as a global brand ambassador.

According to Amorepacific, the ratio of consumers in their 20s increased in seven renewed stores in Korea which launched ‘jihambo’, its new wrapping service.

During China’s 6.18 Shopping Festival, Sulwhasoo's average selling price (ASP) doubled compared to Women’s Day sales in on March 8.

Its Tmall unique visitor rate increased by 34% year-on-year, while the number of online memberships increased by 45%.

In North America, the heightened awareness of the brand helped to drive sales growth.

Similar patterns

Fellow South Korean firm LG H&H also reported a similar slowdown.

According to its Q2 results, overseas sales increased by 4.9% while domestic sales decreased by 5.9%. This caused overall sales to dip by 3%.

A bright spot for LG H&H was North America, where sales increased by 20.9%. On the other hand, sakes in China and Japan declined by 3.4% and 4.2% respectively.

The company highlighted that its beauty division, which consisted of brands such as History of Whoo and Sum37, saw positive growth domestically but sales ultimately decreased by 8.5%.

The company blamed the slow consumption recovery in China for the decline.

LG H&H also manages a beverages business with brands such as Coca-cola and Monster Energy. Beauty and personal care brands make up the lion’s share of the firm’s business at over 70%.

Overall, it reported that sales decreased by 3% to KRW1.8tr (USD1.4bn) while operating profit dropped 27.1% to KRW158bn (USD123m).