AmorePacific, Poor Performance Trend to Continue for the Time Being

[Asia Economy Reporter Song Hwajeong] Amorepacific is expected to continue its sluggish trend as its third-quarter performance this year falls short of market expectations.

According to Hyundai Motor Securities on the 9th, Amorepacific's third-quarter performance is estimated at consolidated sales of 1.0976 trillion KRW and operating profit of 37.2 billion KRW. This represents a decrease of 21.7% and 65.6%, respectively, compared to the same period last year. Compared to the previous quarter, it is expected to increase by 3.9% and 6.2%, respectively.

Hyundai Motor Securities analyst Jeong Hyejin said, "Amorepacific's third-quarter results are expected to fall short of market consensus," adding, "The domestic duty-free channel is expected to see a reduced contraction compared to the previous quarter, but offline channels including department stores, door-to-door sales, and specialty stores will continue to be affected by decreased traffic due to COVID-19." While China and Sulwhasoo are gradually recovering growth momentum, Innisfree, which has a relatively high offline channel ratio, is expected to continue its poor performance trend in the third quarter due to the impact of COVID-19.

The solid growth trend in digital channels that has continued since the first half is expected to persist in the second half. Analyst Jeong explained, "Sales of the entire digital channel, including domestic online channels and direct overseas purchase channels, are expected to grow by about 50% year-on-year in the third quarter," adding, "The strong growth of digital channels will continue until the China Singles' Day (November 11, the largest online shopping festival in China) in the fourth quarter, contributing to profitability improvement."

Despite the growth in digital channels, short-term performance decline is unavoidable. Analyst Jeong said, "Offline channels, excluding online channels, remain under the influence of COVID-19, so short-term performance decline is inevitable," but added, "However, the duty-free channel, which contributes significantly to profits, is gradually recovering, and with the added effect of Singles' Day in the second half, the overall company performance is expected to show gradual improvement." Jeong also noted, "Once the effects of channel restructuring efforts to improve profitability and respond to market changes become visible, stock price momentum will also recover."

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