Beauty MCN Companies' Sales Reach Record High, but Performance Shows Mixed Results...

Active Marketing and Advertising Using Influencers
Beauty MCNs Attracting Large Investments in the Cosmetics Market
Sales Growing but Only Lepere Shows Operating Profit

[Asia Economy Reporter Kim Bo-kyung] As the COVID-19 situation moves toward its final phase with the outdoor mask mandate being lifted starting tomorrow (the 2nd), the cosmetics industry is showing signs of revival.

Beauty-focused MCN (Multi-Channel Network) companies utilizing influencers, as well as cosmetics marketing and advertising sectors, have high expectations for the market. For example, MCN company 'Leferi' saw a significant increase in marketing executions in the first quarter of this year compared to the fourth quarter of last year, resulting in a 36% rise in revenue in that segment.

Despite the prolonged downturn in the cosmetics market due to COVID-19, investments in beauty MCN startups have continued. Dimill received a Series A investment worth 15 billion KRW last year from Hyundai Home Shopping and Amorepacific Group, and Ice Creative also secured investments earlier this year from Amorepacific and the Next Generation Content Private Equity Fund.

However, company performance showed considerable variation. Looking at Leferi, Dimill, and Ice Creative, all specialized in the beauty sector, all three companies saw revenue growth of 10-30% last year compared to the previous year. On the other hand, operating profits declined by up to 64% compared to the previous year, resulting in chronic losses. Only Leferi achieved a profit of about 200 million KRW last year, returning to profitability for the first time since 2019.

Leferi recorded 16.3 billion KRW in revenue and 200 million KRW in operating profit last year on an individual basis. The company recovered its performance by expanding into the lifestyle sector and achieving strong results in influencer commerce business that connects marketing with commerce.

Ice Creative followed with 12.7 billion KRW in revenue last year. The expansion of influencer advertising through aggressive creator recruitment and its own beauty brand 'Hakit' were key drivers of performance. Despite achieving its highest revenue this year, the company recorded losses for the third consecutive year since 2019.

Dimill, launched in 2019, also showed growth with 12.1 billion KRW in revenue last year, a 38% increase compared to the previous year on an individual basis, but posted an operating loss of 2.8 billion KRW, marking two consecutive years of operating losses. The loss amount increased by 65% compared to the previous year. Dimill is making efforts to find new growth engines, including acquiring shares in 'MP Pharma,' which operates the device brand 'Cobim' for allergic rhinitis patients.

An investment industry insider commented, "Large cosmetics companies and related sectors have been aggressively investing in beauty MCN startups as new growth engines since last year, expanding into new businesses, but most companies are showing disappointing results." The insider added, "It is important for these startups to focus on improving their business structure centered on their core essence to achieve stable profits, rather than merely inflating their presence through share acquisitions and similar moves."

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