[Sangsagiro] ① Fashion Platforms Face Wave of Bankruptcies... Market Shakeout Accelerates

Ably Turns to Annual Deficit Last Year
Unveils PB Sales Strategy Targeting 8 Million Members
Complete Capital Erosion and Weak Financial Structure Remain Ably's Weakness
Accumulated Deficit of 222.2 Billion Won, External Funding Essential

As Newnex, the operator of the fashion platform “Brandi,” has filed for corporate rehabilitation, the process of separating the winners from the losers in the fashion platform market is accelerating.

The online fashion market has long been dominated by a “one strong player (Musinsa) and many weak players” structure. However, due to prolonged poor performance and tightening liquidity, more platforms are unable to withstand the pressure and are shutting down operations. Within the industry, attention is now turning to “Ably” and “Zigzag,” which, like Brandi, grew based on Dongdaemun wholesale fashion.

Devising Profitability Improvement Strategies... Formation of “Ably Private Brand” Planning Team

According to the retail industry on October 9, Ably Corporation, the operator of Ably, is in the process of forming a team to launch its own private brand (PB). The company is also recruiting experienced professionals at the team leader level for this initiative. Preferred qualifications for applicants include experience in product planning in categories familiar to female consumers, such as beauty, inner beauty, fashion and accessories, and food. This indicates an intention to launch PB products across all categories currently being sold.

The first PB product is likely to be in the beauty sector. Earlier this year, Ably exclusively launched the “Peach Pposong 3-piece set” in collaboration with the cosmetics brand Skinfood, introducing a cosmetics PB product. It is reported that Ably actively participated in everything from product planning to formulation concept decisions during this collaboration. Although Ably has grown as a fashion platform, it is expected that the company will not introduce a fashion PB in the early stages, as it competes with small brands that purchase clothing from Dongdaemun.

An Ably representative stated, “It is true that we are forming a team related to PB products,” adding, “However, nothing has been specifically decided regarding which category of products will be launched.”

Ably is hoping to expand its profit margin through PB products. The company’s sales last year reached 334.3 billion won, up 29% from 259.4 billion won the previous year, but it posted an operating loss of 15.4 billion won, turning to a deficit from the previous year’s 3.2 billion won loss. While sales volume increased through more product sales, the deficit also widened. Selling and administrative expenses rose to 264.1 billion won, up about 85 billion won from 179.8 billion won the previous year, which dragged down profitability.

The largest component of selling and administrative expenses was advertising and promotional costs, which increased by 20 billion won to reach 43 billion won. The company is believed to have poured significant resources into marketing, launching the “4910” men’s fashion platform in Korea and the “Emood” women’s platform targeting the Japanese market.

Ably has so far focused on increasing its monthly active users (MAU). The company invested heavily in advertising to attract more consumers to its platform and quickly expanded beyond the fashion and accessories categories into food, beauty, and lifestyle. In the food sector, Ably introduced exclusive desserts, and it was the first among fashion platforms to launch webtoon and web novel services.

However, as profitability continues to deteriorate, the industry expects Ably to focus on strengthening its fundamentals through high-margin PB products.

An industry insider commented, “Ably has used its large user base as a growth indicator and continued to attract external investment despite operating at a loss. The strategy now is to boost performance by selling PB products to its 8 million members, but since the main customer base consists of women in their teens and twenties with relatively low purchasing power, there may be limits to business expansion.”

2.222 Billion Won in Accumulated Deficits... Similar to “Corporate Rehabilitation” Brandi

The main reason Ably is highly sensitive to its performance is its unstable financial structure. The industry is paying attention to the fact that Newnex, the operator of “Brandi,” which was once considered one of the “big three” fashion platforms alongside Ably and Zigzag, has continued to show a weak financial structure since its founding and recently filed for corporate rehabilitation.

Ably CEO Kang Seokhun and inside directors hold a 44% stake, with the remainder owned by investors. As the company has continuously attracted external investment, the founder’s stake has been diluted. With deficits persisting for several years, Ably must secure additional operating funds through further investment, but its weak financial structure could be an obstacle.

As of last year, Ably’s accumulated deficit reached 222.2 billion won. The accumulated deficit reflects the total amount of losses incurred over time, and as net losses increase each year, the accumulated deficit also grows. Over the past three years, Ably’s accumulated deficit was 125.2 billion won in 2021, 204.2 billion won in 2022, 204.2 billion won in 2023, and 222.2 billion won in 2024.

Capital erosion is also ongoing. Since the 2019 fiscal year, Ably has been subject to external audits, and has consistently experienced capital erosion, with total equity falling below paid-in capital. Last year, total equity was minus 52.1 billion won, indicating a state of complete capital erosion.

Platforms such as TF (Tmon and Wemakeprice), Newnex, and Ballan, which have been unable to sustain their businesses and have caused damages totaling over 1 trillion won, all share the common issue of chronic capital erosion, which raises concerns among investors. Capital erosion means that even if the company is liquidated, investors are unlikely to recover their investments. If additional funding is not secured and management difficulties worsen, the company may be forced into corporate rehabilitation procedures.

Two years ago, Ably received an opinion from Daejoo Accounting Corporation, its external auditor, noting that the company had incurred operating losses and had a low current ratio, indicating insufficient short-term liquidity, and raising “substantial doubt about the company’s ability to continue as a going concern.” As of last year, Ably’s current assets were 113.9 billion won, current liabilities were 168.6 billion won, and the current ratio was 68%. A current ratio below 100% signals a lack of short-term liquidity.

An Ably representative said, “This is not directly connected to our current financial soundness,” adding, “As of the first half of this year, we recorded a profit and are pursuing both external growth and strengthening our fundamentals.”