Musinsa Grown Bigger, Subsidiary Becomes a 'Hindrance'... Jomanho, General CEO's 'Challenge'

Musinsa Achieves '1 Trillion Won Sales' but Faces 'Operating Loss'
Subsidiary Performance Improvement Remains a Challenge Amid Slowing Core Business Growth Rate

Musinsa, which had nearly 1 trillion won in sales last year, has been held back by its subsidiaries. The profitability significantly deteriorated as SLDT, operating the resale platform 'Soldout,' and Musinsa Trading, distributing domestic and international clothing brands, continued to underperform. Musinsa plans to turn a profit this year through cost improvement efforts at its subsidiaries and strengthening online sales strategies.

According to the Financial Supervisory Service's electronic disclosure system on the 2nd, only 4 out of 17 Musinsa subsidiaries with disclosed financial information recorded profits. SLDT, which operates the limited-edition product trading platform Soldout, posted a loss of about 28.8 billion won, and logistics subsidiary Musinsa Logistics recorded an operating loss exceeding 9.1 billion won.

Musinsa Trading posted sales of 51.6 billion won last year but recorded an operating profit of only 14 million won. This is a sharp decline from 3 billion won in 2022, effectively resulting in no profit. The net loss for the period was 5 billion won.

Musinsa Trading is a subsidiary that acquires distribution rights for domestic and international brands and handles their distribution and marketing. This business structure is similar to that of major domestic fashion companies that exclusively distribute overseas luxury brands. Musinsa Trading mainly distributes overseas streetwear brands. The brands it carries include Sleepy Jones, Noah, Jansport, 032c, Dickies, Sorogood, and about ten others. Musinsa entered the overseas brand licensing business for the first time in 2021 by acquiring 100% of the shares of Inu International.

Musinsa Trading had steadily recorded profits and increased sales even before the acquisition. As of 2020, sales were 22 billion won, with an operating profit of 2.2 billion won. The sharp decline in trading profits last year was due to increased cost burdens.

Some brands raised their commissions, increasing both payment and sales commissions. Since the company operates by acquiring domestic and international brand licenses and paying commissions, if some brands raise commissions by 10-20%, the company's cost burden inevitably increases. Additionally, operating the offline store 'Empty' in Seongsu, launched in 2022, further increased cost burdens.

SLDT contributed most significantly to dragging down the company's performance by recording losses in the hundreds of billions of won. SLDT became an independent subsidiary within Musinsa in 2020. After continuous losses, it undertook measures last year such as integrating inspection centers, enhancing logistics systems, and reducing marketing expenses. As of last year, the operating loss was 28.8 billion won. Sales increased about fourfold from 3.5 billion won in 2022 to 13.4 billion won last year, and the loss margin narrowed, but the company remained in the red.

The poor performance of subsidiaries is a major challenge for Musinsa. In Musinsa's core business, its private brand (PB) 'Musinsa Standard' is rapidly increasing sales in the offline market through a shop-in-shop strategy. However, aside from this, there is virtually no next growth engine.

This is not unrelated to the return of CEO Jo Man-ho to the front lines of management this year. CEO Jo appointed separate representatives for ▲Global & Brand Business ▲Musinsa and 29CM divisions, and Han Moon-il, who developed Musinsa Standard, was appointed to lead the new Global & Brand Business. A Musinsa official said, "Internally, we believe the external environment is difficult, and it is time to nurture new businesses," adding, "We aim to make Musinsa a department store where customers can find domestic and overseas brands, Musinsa Standard, and lifestyle products all in one place."

Musinsa Trading plans to strengthen Musinsa's competitiveness in overseas brand distribution. To this end, Musinsa Trading will focus on expanding sales profits primarily through online channels. Having recently opened the second Empty store in Apgujeong last month, it expects profits from new sales to be reflected in its performance.

SLDT, which has launched emergency management to improve profitability this year, is focusing on promotions that practically contribute to profits. This means concentrating on efficiency. Marketing expenses are expected to continue to be reduced as they were last year. An SLDT representative explained, "We will simplify basic transaction policies and enhance commission benefits to improve user convenience," adding, "We are also working on business structure improvements."

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