Amorepacific Reports Operating Profit of 150.7 Billion KRW in 2020, Down 70% Year-on-Year

[Asia Economy Reporter Seungjin Lee] Amorepacific Group experienced a significant decline in both sales and operating profit last year due to the direct impact of COVID-19.

Amorepacific Group announced on the 3rd that it recorded sales of 4.9301 trillion KRW and operating profit of 150.7 billion KRW in 2020. Compared to the same period last year, sales decreased by 21.5% and operating profit dropped by 69.8%.

Last year, the impact of COVID-19 caused a sharp decline in foreign tourists, and domestic social distancing measures led to a significant decrease in offline channel sales. Additionally, labor costs and one-time expenses contributed to an overall decline in operating profit. However, domestic online channels showed strong sales growth due to strengthened collaboration with digital platforms and diversification of marketing methods. Core products such as Sulwhasoo, Laneige, and Ryo performed well, enhancing brand competitiveness.

Amorepacific’s Domestic and Overseas Businesses Both Decline

Looking at the management performance of major beauty subsidiaries last year, Amorepacific recorded sales of 4.4322 trillion KRW (-21%) and operating profit of 143 billion KRW (-67%). Domestic business sales decreased by 23% year-on-year to 2.7064 trillion KRW, while overseas business sales fell by 16% to 1.7453 trillion KRW.

Amorepacific’s domestic business saw sales decline in offline channels such as duty-free stores due to reduced foot traffic and a sharp drop in foreign tourists. However, online sales grew approximately 50% year-on-year through expanded digital channel presence, launch of online-exclusive brands, and activation of live broadcasts.

Due to the impact of COVID-19, Amorepacific’s overseas business recorded an overall downward trend. Nevertheless, online sales expanded through partnerships and collaborations with various platforms and e-commerce channels. The Asia business posted sales of 1.6497 trillion KRW, down 16% year-on-year. Despite the difficult situation, Amorepacific Group explained that efforts were made to target the Chinese and Southeast Asian markets focusing on flagship global brands.

The North American business recorded sales of 76.6 billion KRW (-18%). Sales declined due to reduced offline demand and efficiency improvements in Innisfree’s directly operated stores. The European business posted sales of 19 billion KRW (-13%), with overall sales falling due to the closure of major offline stores and the shutdown of Sulwhasoo department store outlets.

Road Shops Hit Hard by COVID-19

Innisfree recorded sales of 348.6 billion KRW (-37%) and operating profit of 7 billion KRW (-89%). Sales and operating profit declined due to the reduction of offline stores and ongoing sales decreases caused by COVID-19. Etude posted sales of 111.3 billion KRW (-38%). However, the deficit narrowed due to restructuring the business to focus on profitability, including reducing manufacturing costs.

Espoir recorded sales of 42.5 billion KRW (-9%). Sales declined due to store closures and reduced offline customer visits, and operating profit turned to a loss due to increased marketing expenses. Estra posted sales of 99 billion KRW (-11%) and operating profit of 400 million KRW (-94%). Despite strong performance in online channels, overall results declined due to decreased sales in the inner beauty category. Amos Professional recorded sales of 67.9 billion KRW (-19%) and operating profit of 14.3 billion KRW (-15%).

Although most road shops’ performance worsened due to COVID-19, they minimized sales declines through digital transformation. Etude actively targeted online channels with products like the KakaoTalk Gift exclusive ‘Birthday Bang Eye Palette Oven Kit,’ reducing losses. Innisfree also expanded online channels through strategic collaboration with digital platforms, and Amos Professional digitized salon transactions.

Business Structure Improvement in 2021... Target Sales of 5.6 Trillion KRW

This year, Amorepacific Group plans to accelerate strong brand development, digital transformation, and business structure improvement to achieve sales of 5.6 trillion KRW and operating profit of 380 billion KRW. To this end, it will focus on nurturing ‘engine products’ that reflect the unique value and spirit of the times of each brand.

The group also aims for over 30% sales growth in the e-commerce sector. To achieve this, it plans to strengthen collaborative relationships with major domestic and international platforms and enhance various marketing capabilities such as live commerce. Additionally, it will continue business structure improvements for profitable growth and expand investments in new growth engines such as health functional foods and derma cosmetics.

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