“Zinus, Passing Through the Worst... Expecting Relief from US Logistics Issues”

[Asia Economy Reporter Jang Hyowon] Korea Investment & Securities analyzed on the 6th that Zinus is going through the worst phase, and its performance will quickly recover once the logistics issues within the United States are resolved.

Zinus announced on the 5th that it recorded sales of 264.171 billion KRW and an operating profit of 9.244 billion KRW in the second quarter of this year. Sales increased by 5.08% compared to the previous year, but operating profit decreased by 30.79%. Net profit was 4.304 billion KRW, down 48.26% compared to the same period last year. Operating profit fell short of market expectations by 57%.

The poor performance is attributed to reduced purchases due to excess inventory at its client, a U.S. retailer, and a deterioration in cost ratio caused by rising raw material prices. Sales in the U.S. shrank by 2% year-on-year, but other countries showed favorable growth. In Korea, sales grew by 164% year-on-year due to increased brand awareness.

Myungjoo Kim, a researcher at Korea Investment & Securities, stated, “Walmart, a major client of Zinus, lowered its guidance for the third quarter this year due to non-essential goods inventory clearance,” and analyzed that “the excess inventory problem at retailers is the biggest reason for Zinus’s sluggish U.S. sales.”

Researcher Kim added, “Considering Walmart’s inventory turnover period of 41 days, the excess inventory issue that occurred in the first quarter will mostly be resolved in the second quarter,” and explained, “Prices of steel and chemical products (PPG) have also stabilized downward compared to the previous year, so cost ratio improvement is expected from the fourth quarter of this year.”

Zinus plans to promote sales using the distribution channels of the Hyundai Department Store Group starting in the second half of the year. Earlier, in March, Zinus was acquired by Hyundai Department Store.

Researcher Kim said, “Zinus products still maintain top rankings in Amazon’s bestseller lists, and products manufactured at the U.S. Georgia factory are also showing good sales performance,” and forecasted, “Since Zinus’s production capacity has steadily increased since 2019, its performance and valuation will rapidly recover simultaneously once the logistics issues within the U.S. are resolved.”

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