F&F, Limited Impact from China Boycott Movement... "Will Resolve Over Time"

[Asia Economy Reporter Jang Hyowon] The stock price of fashion company F&F showed a decline amid concerns over a boycott movement against global brands in China. However, the market views the actual impact on performance as limited and expects the negative issues to be resolved over time.

According to the Korea Exchange on the 27th, F&F closed at 130,000 KRW, down 6.47% from the previous day. This is analyzed to be due to the combination of the boycott movement against global fashion brands in China and profit-taking desires following recent stock price increases.

Recently, the United States, the European Union (EU), and the United Kingdom have criticized human rights abuses in the Xinjiang Uygur Autonomous Region of China, leading to a spread of boycott movements against global brands within China. Companies that have declared suspension of supply from Xinjiang products include Nike, H&M, New Balance, Zara, Under Armour, Gap, and Fila.

As a result, the stock prices of these related companies have recently fallen by 4-7%. In contrast, Chinese sportswear companies such as Li Ning, Xtep, and Anta Sports have seen stock price increases due to expectations of a positive spillover effect.

F&F’s flagship brand, 'MLB,' is a brand launched in 1997 under a licensing agreement with Major League Baseball in the United States. Growth in China began around 2017, mainly through duty-free channels, and after signing the China distribution rights in February 2019, the brand entered Tmall and began full-scale business operations locally in China.

Last year, F&F aimed to expand its own offline stores in China but was hindered by COVID-19. Therefore, the company focused its strategy on expanding agency stores (franchise model), opening 71 agency stores as of the end of last year. Sales also exceeded 30 billion KRW.

The market expects the impact of the boycott movement in China on F&F’s performance to be limited.

Shinae Park, a researcher at KB Securities, analyzed, “Since MLB is still in the early stages of entering the Chinese market, its brand awareness in China is not as high compared to global brands like Nike,” and added, “The local subsidiary’s sales scale is around 70 billion KRW, so the impact on performance is limited.”

Researcher Park also added, “Considering past boycott cases, the negative impact on brand value and performance is likely to be resolved over time.”

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