[Click eStock] "SJ Group, Kangol Kids Expected to Maintain High Growth Next Year"

IBK Investment & Securities Report

[Asia Economy Reporter Minji Lee] IBK Investment & Securities forecasted on the 17th that SJ Group will continue to show high sales growth next year due to the rapid increase in Kangol Kids sales.

The third-quarter results recorded sales of 32.8 billion KRW and operating profit of 5.1 billion KRW, marking growth of 34% and 48% respectively compared to the same period last year. However, operating profit decreased by 48% compared to the previous quarter. This was due to marketing expenses of 1.05 billion KRW spent ahead of the launch of the new brand LDC next month, and similar or higher expenses are expected in the fourth quarter. Minhee Lee, a researcher at IBK Investment & Securities, explained, “Sales are estimated to grow significantly by about 41% year-on-year to 40 billion KRW, but the operating profit margin is expected to be similar to the previous quarter.”

The company introduces licenses for global brands with market expansion potential and high recognition, developing and selling items that fit the brand concept. The company’s main brands, ‘Kangol’ and ‘Helen Kaminski,’ are well-known hat brands from the UK and Australia, respectively, but domestically they are expanding categories to bags and clothing. In 2018, they launched Kangol Kids, a total kids fashion brand, which has driven high sales growth. As of last year, the sales proportion by brand was Kangol (64%), Helen Kaminski (22%), and Kangol Kids (14%), while sales by distribution channel were department stores (42%), shopping malls (15%), online (35%), and duty-free shops and others (8%).

With Kangol Kids sales increasing by about 115% compared to a year ago, the company’s overall scale is expected to grow by 36% this year. Excluding the special pandemic situation last year, the company has maintained high sales growth annually and has shown a long-term upward trend in operating profit margin. Researcher Minhee Lee stated, “Thanks to the high growth in Kangol Kids sales next year, the company’s total sales are expected to grow by 23%, and profitability will also improve,” adding, “The company’s price-to-earnings ratio (PER) is 7.9 times, which has decreased compared to the past range of 6.5 to 13.9 times.”

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