Hansome, Q2 Operating Profit Plummets 30%... Seeking Breakthrough in Cosmetics

Decline in Domestic Demand Reduces Operating Profit Amid Brand Overseas Expansion
Hansome Life & Secures 100% Stake... Strengthening Cosmetics
Expected Expansion of Brand Portfolio Beyond Luxury Focus

Hansome, a fashion company affiliated with Hyundai Department Store Group, saw its second-quarter operating profit plunge by about 30% this year. This was due to sluggish domestic consumption amid prolonged high inflation and high interest rates.

According to the Financial Supervisory Service's electronic disclosure system on the 6th, Hansome's sales in the second quarter amounted to 341.7 billion KRW, a 1.2% decrease compared to the same period last year. Operating profit during this period was 4.1 billion KRW, down 30% year-on-year. Considering that the market had expected sales and operating profit of 343.5 billion KRW and 7.4 billion KRW respectively, the actual performance appears to have been weaker than anticipated. On a cumulative basis for the first half of the year, sales decreased by 2.2% to 735.3 billion KRW, and operating profit fell 40% to 36.5 billion KRW. A Hansome representative explained, "Both sales and operating profit declined in the second quarter due to sluggish domestic consumption."

The decline in operating profit is estimated to have been exacerbated by the overseas expansion of key brands such as System and Time. Hansome is turning its attention to overseas markets, aiming to enter the European market. System, which has been conducting solo presentations (PT) for a long time, recently opened a pop-up store at Lafayette, one of Paris's top three department stores, and in June launched a global flagship store in central Paris.

The women's wear brand Time also participated in the '2024 Fall Winter Paris Fashion Week' with a solo PT. Sojeong Cho, a researcher at Kiwoom Securities, said, "They are trying to raise overseas awareness through collaborations with other brands, showroom operations, and order meetings, which likely increased marketing expenses."

In response to the prolonged downturn in the fashion industry due to the economic recession, Hansome plans to find a breakthrough for performance improvement by strengthening its beauty (cosmetics) division. First, Hansome intends to secure 100% ownership of Hansome Life & Co., a cosmetics manufacturer. Hansome Life & Co. was formerly Cleanzen Cosmetical, in which Hansome acquired a 51% stake in 2020, making it a subsidiary.

Hansome Life & Co. specializes in manufacturing high-performance cosmetics. Its main brand is the luxury cosmetics brand 'Oera.' Since it has primarily operated targeting Hyundai Department Store's VIP customers, it has pursued premiumization rather than mass appeal. As a result, its performance has not grown rapidly. As of last year, the company's sales were 4.7 billion KRW, with a net loss of 5.9 billion KRW. Hansome announced in its disclosure that it will "secure 100% ownership of the subsidiary to strengthen competitiveness in the beauty business."

However, it is expected that in the future, Hansome will diversify its portfolio to include not only premium cosmetics but also affordable products with broader appeal. A Hansome representative said, "Although specific products have not yet been decided, we plan to launch new brands targeting different customer segments in collaboration with our cosmetics manufacturing affiliate Hyundai Bioland. We will actively pursue not only the launch of new cosmetics brands but also the expansion of imported beauty brands."

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