Nepa Suspends Operations at French Stores... Is Overseas Business Withdrawal Imminent?

[Asia Economy Reporter Yujin Cho] It has been confirmed that Nepa, a domestic outdoor brand, has closed its store operations in Chamonix, France, which it had used as a foothold for its entry into Europe. There are also forecasts that the overseas subsidiaries, led by CEO Seonhyo Lee, will follow the withdrawal process as they struggle with prolonged deficits and increasing debt.

According to industry sources on the 2nd, Nepa recently suspended business activities at its flagship store in the French mountain town of Chamonix. Nepa's first overseas flagship store, located in Chamonix, a mountain village adjacent to Mont Blanc in the Alps, was established on three floors from basement level 1 to the second floor above ground. The Chamonix subsidiary, primarily engaged in selling outdoor clothing and equipment, has been led by CEO Seonhyo Lee, who has been directing the overall business.

The suspension of operations at Nepa's Chamonix store is due to deteriorating profitability. Since its opening in 2015, the Chamonix subsidiary has recorded net losses every year. As deficits accumulated, the debt nearly doubled from approximately 1.8 billion KRW at the end of 2016 to 3.3 billion KRW. A Nepa official stated, "Operations at the Chamonix store in France have been suspended, and future operational plans are under review," but did not comment on specific plans such as the timing of withdrawal.

There are also predictions that Nepa may completely withdraw from overseas business. The directly operated store in Weihai, China, which opened earlier, has also failed to escape the trend of net losses. Debt surged by more than 1500% as of the end of 2018 compared to three years prior. Nepa has temporarily suspended its strategy to expand into China through selecting local partners after reviewing business viability including profitability.

A Nepa representative said, "Currently, we operate one directly managed store in Weihai, and there are no plans to expand stores in the future," adding, "We are developing our business mainly online through platforms such as Tmall." Nepa challenged overseas business starting with the directly operated store in Weihai, China, in 2013 when the domestic outdoor market was booming. After entering Chamonix, France in 2015, it planned to expand its business stage across Europe with a goal of opening more than 500 stores, but faced difficulties in establishing self-sustainability in the homeland of traditional outdoor brands.

An industry insider said, "Since Korea is lagging behind advanced markets such as Europe and the United States in the global outdoor market, it is not easy to develop self-sustainability in global competitiveness," adding, "With the domestic outdoor market sluggish and profitability improvement urgent, the decision to suspend operations may lead to withdrawal from overseas business."

This content was produced with the assistance of AI translation services.