Amorepacific, poor performance in the first quarter of this year due to sluggish overseas business… Stock prices soaring
Cosmetics stocks have recently been on a downtrend. This is attributable to the reduced sales of duty-free shops due to the spread of COVID-19 and the sluggish performance in overseas markets. As a result, Amorepacific, which was called a major cosmetics affiliate, also saw a decrease in sales and operating profit in the first quarter of this year compared to last year.
Amorepacific Group announced on the 28th that its operating profit in the first quarter of this year was 171.2 billion won, down 13.4% from the same period of the previous year. Compared to the first quarter of the previous year, sales decreased 9% to KRW 1.262.8 trillion, and net income decreased 25.2% to KRW 132.2 billion.
Amorepacific, a major affiliate, recorded sales of 1.165 trillion won, down 7.0% from the same period last year. Operating profit was 158 billion won, down 10.4% from the previous year, and net profit was 120.1 billion won, down 12.8% from the same period.
Amorepacific’s domestic business recorded 732.8 billion won in sales, down 9.9%, and 112 billion won in operating profit, down 10.6%. According to Amorepacific, online sales of luxury brands grew by more than 20% through the pre-launch of major new products, such as Sulwhasoo’s ‘Concentrated Ginseng Renewing Serum’ and Hera’s ‘Sensual Powder Matte Liquid,’ but overall sales declined due to a drop in duty-free channel sales. Amorepacific said, “In the domestic market, online sales grew by more than 20%, but overall sales declined due to the drop in duty-free sales.
Overseas business also failed to avoid sluggish performance. In the case of overseas sales, total sales fell 6.1% to 419.9 billion won compared to the same period last year. Operating profit also fell 19.5% to 42.1 billion won. This is due to a decrease in sales in China, which accounts for a large portion of the Asian region.
Sales in China fell 10% in the aftermath of the re-spread of COVID-19. However, online sales increased as Sulwhasoo focused on cultivating the ‘Concentrated Ginseng Saeng’ line. In other Asian regions, sales continued to decline as social distancing continued. In Europe, overall sales also declined due to a decline in sales of perfume brands. In response, LANEIGE is increasing its online sales, enhancing its brand competitiveness in the European market.
Despite such poor performance in the first quarter, Amorepacific’s share price has been strong in the early trading session. As of 11:13 am on the 28th, Amorepacific was trading at 178,000 won, up 9.2% (15,000 won) from the previous day.
The fact that Shanghai, China, which is in its first month of lockdown, announced that it will gradually lift the lockdown in some areas from the beginning of next month is an analysis that is working as a good thing. Shanghai Municipal Health Authority announced on the 27th that it plans to implement ‘limited number of people, limited area, limited activities’ in areas that have achieved ‘social immunity zero corona’. Corona with social immunity means that new infections (including asymptomatic people) occurred only in quarantine facilities, thereby blocking the risk of community transmission.
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