Kris F&C, Declining Performance After Listing... Another Blow from COVID-19

[Asia Economy Reporter Jang Hyowon] Golfwear company Chris F&C has shown continuous poor performance since its listing in 2018, with its stock price remaining below the initial public offering (IPO) price. Although the first quarter of this year is expected to be sluggish due to the impact of the novel coronavirus disease (COVID-19), sales recovery has been observed since last month, and performance is expected to normalize in the second quarter.

Chris F&C is a golf apparel manufacturing and sales company established in 1998. Its main brands include Paris Gates, Ping, Phantom, Master Bunny Edition, and St. Andrews. Phantom is the only in-house brand, while the others are licensed brands.

As of the end of last year, the sales composition ratio was Paris Gates (32.8%), Ping (32.1%), Phantom (30.2%), Master Bunny Edition (4.3%), and others (0.4%). The top three brands drive the overall sales.

Chris F&C’s sales have declined since its 2018 listing. Before listing, the company’s consolidated sales were 225.9 billion KRW in 2015, 266.9 billion KRW in 2016, and 281 billion KRW in 2017, recording an average annual sales growth rate of 11.7%.

However, sales dropped sharply by 8.26% to 257.8 billion KRW in 2018 and increased by only 0.6% last year. To achieve the ‘500 billion KRW sales by 2021’ target set at the time of listing, sales would need to roughly double within two years.

Operating profit declined even more significantly. The consolidated operating profit, which was 46.3 billion KRW in 2017, decreased by 18.57% over two years to 37.7 billion KRW last year. The operating profit margin also fell from 16.5% to 14.5%.

The decrease in operating profit is attributed to a substantial increase in advertising and sales promotion expenses. Last year, Chris F&C spent 11.4 billion KRW on advertising and 2.5 billion KRW on sales promotion, representing increases of 54.7% and 415.6% respectively compared to the previous year.

Along with poor performance, the stock price has not surpassed the IPO price even once in about one year and seven months since listing. As of the 12th, Chris F&C’s closing price was 17,200 KRW, which is 42.67% lower than the IPO price of 30,000 KRW.

The outlook for the first quarter performance this year is also not bright. Sales declined due to the overall clothing market downturn caused by the COVID-19 pandemic.

A Chris F&C official said, “Sales decreased in February and March due to COVID-19, resulting in lower sales compared to the first quarter of last year. We also provided 1.5 billion KRW in mutual growth funds such as rent support to struggling retailers, which is expected to be recorded as a one-time expense. However, sales are recovering again in April and May, so second-quarter performance is expected to improve.”

However, having a large amount of cash on hand is a positive factor. Chris F&C raised 41.3 billion KRW from investors in the 2018 IPO. Of this, 7.8 billion KRW was used by the end of last year, leaving about 33.5 billion KRW in cash. Due to the large cash assets, net borrowings are negative. As of the end of last year, Chris F&C’s net borrowings stood at -30 billion KRW. Total borrowings were 21.3 billion KRW, while cash assets amounted to 51.4 billion KRW.

Chris F&C plans to use this cash for new businesses or to expand existing brand operations in the future.

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