[Why&Next] Overseas Sales Near 90%... Divergent Profitability in K-Beauty's "This Formula"

Breaking Into Amazon and Heading to Europe: K-Beauty’s New Growth Axis
APR Achieves Industry’s Highest Q1 Operating Profit
Amorepacific and LG Household & Health Care Shift Global Strategies Amid Profitability Pressures

The growth formula for K-beauty is changing. The growth axis, which until now relied on the Chinese market and duty-free stores, is rapidly shifting to online platforms in the United States and Europe. APR, which moved quickly to secure its position in these markets, achieved its highest-ever quarterly results in the first quarter of this year. In contrast, traditional beauty powerhouses such as Amorepacific and LG Household & Health Care have faced profitability pressures during their global business restructuring processes.

According to the industry on May 15, APR posted consolidated sales of 593.4 billion won and operating profit of 152.3 billion won in the first quarter of this year. These figures represent increases of 123% and 174%, respectively, compared to the same period last year, marking record highs for both sales and operating profit on a quarterly basis.

In terms of sales volume alone, APR is about half the size of Amorepacific, the leading company in Korea's cosmetics industry, but its profitability has surpassed its larger rival. APR's first-quarter operating margin exceeded 25% for the first time, which is double that of Amorepacific.

APR’s Overseas Sales Near 90%... No.1 Market Share in Amazon Beauty

The main driver of APR’s high growth was overseas markets. APR’s overseas sales in the first quarter reached 528 billion won, nearly tripling from the same period last year. Overseas sales accounted for 89% of its total revenue. Notably, U.S. sales surged by 250% to 248.4 billion won, with their share of total sales rising from 27% in the first quarter of last year to 42% this year.

This shift illustrates how the competitive arena for K-beauty is moving. According to U.S. market research firm Navigo Marketing, APR ranked first in the U.S. Amazon beauty category in the first quarter of this year with a market share of 14.1%. Whereas major cosmetics companies in the past built their brands through department stores, duty-free shops, and local distribution networks, APR expanded consumer touchpoints by combining Amazon, social media, and influencer marketing.

An industry insider commented, "APR’s growth is not simply the result of one particular product selling well, but rather the combined effect of product planning, content marketing, and platform sales all working together," adding, "If this structure can be proven repeatable, the valuation standards for K-beauty companies could also change."

Three APR beauty devices. APR

Amorepacific·LG H&H... Divergent Performances amid Weakness in China

On the other hand, established major cosmetics companies received mixed results during the transition of their global businesses. Amorepacific Group recorded sales of 1.2227 trillion won and operating profit of 137.8 billion won during the same period, up 5% and 6.9% year-on-year, respectively. Its core affiliate, Amorepacific, saw sales of 1.1358 trillion won and operating profit of 126.7 billion won, increases of 6.0% and 8.3%, respectively. Growth in derma-based brands and overseas market expansion drove these performances.

Amorepacific’s domestic sales rose 8.5%, while overseas sales increased 5.8%. In particular, sales in the Americas and EMEA (Europe, Middle East, Africa) rose by 11.2% and 16.4% respectively, offsetting the decline in Greater China sales.

However, increased marketing expenses and investments in product portfolio expansion to roll out new brands in Western markets led to a drop in overseas business operating profit from 69.6 billion won last year to 56.7 billion won this year, a decrease of 18.5%. Sales increased, but the costs incurred to secure a foothold in growth markets weighed on profitability.

Among the three companies, LG Household & Health Care showed the most pronounced weakness. In the first quarter of this year, sales fell 7.1% year-on-year to 1.5766 trillion won, and operating profit declined 24.3% to 107.8 billion won. In its core beauty segment, sales decreased 12.3% to 771.1 billion won, and operating profit plummeted 43.2% to 38.6 billion won. Profitability fell sharply due to a combination of reduced duty-free volumes and increased marketing investments.

The overseas business has not yet shown a clear rebound. LG Household & Health Care’s overseas sales in the first quarter reached only 540.8 billion won, up just 0.9% from the same period last year. Chinese sales fell by 14%. On the other hand, North American sales rose by 35%, signaling a shift in business structure. The problem is that growth in North America is not yet large enough to offset sluggish performance in China and duty-free channels. Another industry source analyzed, "The key issue will be how quickly they can establish brand and product strategies suitable for North American and European online channels, moving beyond the traditional growth structure centered on luxury brands such as ‘Whoo’ and Chinese consumers."

Estra Atobarrier365 Cream. Amorepacific

The first-quarter results of these companies vividly illustrate the shift in the center of gravity in the K-beauty market. In the past, brand recognition in the Chinese market and sales power in duty-free channels were the core competitive advantages. Now, the ability to secure consumer data on U.S. and European online platforms and reflect this data in product development and marketing has become more important. Speed of product launches, digital content planning capabilities, and platform operation skills are emerging as new sources of corporate competitiveness.

The overall industry trend is moving in the same direction. In the first quarter of this year, cosmetics exports to the U.S. increased by 40% year-on-year, while exports to Europe grew by 53%, surpassing those to the U.S. The number of K-beauty products in Amazon’s beauty top 100 also expanded to 28. This means K-beauty has moved beyond being a temporary trend for certain countries or brands to become a major category in the global beauty market.

Industry players predict that competition in the European market will intensify further. Following the rapid rise in K-beauty awareness in North America, Europe is also seeing overlapping trends of ingredient-focused consumption, a preference for derma cosmetics, and the expansion of online platforms. However, Europe is a market with strict cosmetics regulations and high consumer loyalty, so experts point out that building long-term local trust through brand strategy is more important than short-term hit products.

Another industry insider commented, "In terms of growth rate alone, Europe is already the next major battleground for K-beauty, surpassing North America," adding, "It is highly likely that the market will be restructured around companies equipped with regulatory compliance and localization capabilities."

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