Profit plunges at AmorePacific as Chinese shoppers stay home

Profit plunges at AmorePacific as Chinese shoppers stay home

Although rival LG’s balance sheet looks distinctly healthy, the Chinese boycott is continuing to affect profits over at AmorePacific. According to a report published by the Korea Times, the K-beauty behemoth saw net profit dive 20.9 percent in the first quarter of the current financial year compared to the same period a year ago.

Net income weighed in at KRW176.7 billion, down sharply from the 223.5 billion registered last year, while operating profit plunged 25.5 percent to KRW 235.9 billion and sales fell 8.8 percent to KRW1.43 trillion.

Net income for the AmorePacific Group totalled KRW216 billion, down 18.9 percent from the same period last year while the group’s operating profit declined 25.5 percent to KRW278 billion and sales were down 10.3 percent to KRW1.66 trillion.

AmorePacific blamed the dip in Chinese tourists following the THAAD crisis for the lackluster performance however, was keen to note that its online beauty sales increased sharply during the period thanks to strengthened customized marketing for its digital platforms.

3 Comments

  1. John

    While the cosmetic sector is growing by 18.6% AmorePacific is getting hammered.

    Reply
  2. NEIL FARMER ASSOCIATES

    Despite these disappointing figures for Amore digital and online sales performed well.
    Clearly the downturn in Chinese visitors has had an impact, so it will be
    interesting to see what the next set of numbers look like. The business has had a good run and I believe
    there should be better times ahead, with online a major contributor.

    Reply
  3. Deb

    Perhaps their brand equity is losing some appeal given the price and volume controls the company is implementing in the travel retail channel, where their peers are seeing strong growth. I think the company has underestimated the power of globetrotting beauty influencers, and the complimentary nature of the travel retail channel. Additionally, their portfolio is weak vs peers given the larger focus on mass market brands. The premium / higher end segments have been growing faster, as seen in LG H&H, Estee Lauder, Loreal and Shiseido’s results.

    Reply

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