By Park Si-soo
Woongjin Group is adding cosmetics to its business portfolio.
The group ― with five affiliates engaging in publications, book distribution, golf, an indoor theme park and renewable energy ― said on Thursday it recently secured the exclusive rights to sell Dermalogica products in the Korean market.
Dermalogica is an American skincare brand whose products lineup includes cleansers, exfoliants, toners and masques. The California-based firm operates its business in nearly 80 countries.
To start sales within the first half of the year, Woongjin established an affiliate, Woongjin Tutuluv, and named an aide of Woongjin Chairman Yoon Seok-keum its president.
"We have yet to draw a clear picture of the new business. So, at this moment, it's hard to predict when we will start it," said Yoon Cheol-joong, a Woongjin spokesman. "Dermalogica's products are widely used in aesthetic shops in the U.S. In this regard, we consider domestic aesthetic shops as target customers in the initial phase of the business. Afterward, we will start selling at duty-free ships and cosmetics stores. We are also considering adopting a doorstep selling policy."
He said the company will soon open a flagship store in Nonhyeon, an affluent business and residential district in southern Seoul.
This is Woongjin's third entry into the cosmetics business. Yoon, who founded Woongjin in 1980, made big money with a cosmetics brand "Koreana," which he co-launched in 1988 with Yoo Sang-ok. Koreana grew rapidly on a doorstep selling strategy in the 1990s. It posted record sales of 200 billion won in 1997, but Yoon withdrew from the business in the face of the Asian financial crisis in 1999.
He made the second entry in 2010 by launching Woongjin's own cosmetics brand "Re:NK." It got off to a good start thanks to celebrity marketing, raking in nearly 20 billion won in the first three months, but he pulled out of the business, once again, in 2013. That's because he had to sell Woongjin Coway, Korea's top water purifier maker that owned Re:NK, to private equity fund MBK Partners to keep his troubled group afloat.
Despite the painful restructuring, Woongjin Group ended up going under court receivership in October 2012.
It pulled itself out of the receivership in February. Woongjin posted 113.7 billion won in sales and 3.5 billion in operating profit in the first quarter of the year.
Analysts say Yoon seems to have a rosy perspective on the cosmetics business, based on his memory of past success. But things have changed a lot, they said.
"What's worrisome is that the business environment is increasingly competitive" said Park Eun-kyung, an analyst at Samsung Securities. "Only a handful of leading brands show good performances, while others are experiencing tough times. So I think it may be difficult for Woongjin to make a soft landing in the market." Another analyst, Ha Tae-gi at SK Securities, had a different view, saying Yoon's knowhow will lead to a good launch.
Woongjin Group is adding cosmetics to its business portfolio.
The group ― with five affiliates engaging in publications, book distribution, golf, an indoor theme park and renewable energy ― said on Thursday it recently secured the exclusive rights to sell Dermalogica products in the Korean market.
Dermalogica is an American skincare brand whose products lineup includes cleansers, exfoliants, toners and masques. The California-based firm operates its business in nearly 80 countries.
To start sales within the first half of the year, Woongjin established an affiliate, Woongjin Tutuluv, and named an aide of Woongjin Chairman Yoon Seok-keum its president.
"We have yet to draw a clear picture of the new business. So, at this moment, it's hard to predict when we will start it," said Yoon Cheol-joong, a Woongjin spokesman. "Dermalogica's products are widely used in aesthetic shops in the U.S. In this regard, we consider domestic aesthetic shops as target customers in the initial phase of the business. Afterward, we will start selling at duty-free ships and cosmetics stores. We are also considering adopting a doorstep selling policy."
He said the company will soon open a flagship store in Nonhyeon, an affluent business and residential district in southern Seoul.
This is Woongjin's third entry into the cosmetics business. Yoon, who founded Woongjin in 1980, made big money with a cosmetics brand "Koreana," which he co-launched in 1988 with Yoo Sang-ok. Koreana grew rapidly on a doorstep selling strategy in the 1990s. It posted record sales of 200 billion won in 1997, but Yoon withdrew from the business in the face of the Asian financial crisis in 1999.
He made the second entry in 2010 by launching Woongjin's own cosmetics brand "Re:NK." It got off to a good start thanks to celebrity marketing, raking in nearly 20 billion won in the first three months, but he pulled out of the business, once again, in 2013. That's because he had to sell Woongjin Coway, Korea's top water purifier maker that owned Re:NK, to private equity fund MBK Partners to keep his troubled group afloat.
Despite the painful restructuring, Woongjin Group ended up going under court receivership in October 2012.
It pulled itself out of the receivership in February. Woongjin posted 113.7 billion won in sales and 3.5 billion in operating profit in the first quarter of the year.
Analysts say Yoon seems to have a rosy perspective on the cosmetics business, based on his memory of past success. But things have changed a lot, they said.
"What's worrisome is that the business environment is increasingly competitive" said Park Eun-kyung, an analyst at Samsung Securities. "Only a handful of leading brands show good performances, while others are experiencing tough times. So I think it may be difficult for Woongjin to make a soft landing in the market." Another analyst, Ha Tae-gi at SK Securities, had a different view, saying Yoon's knowhow will lead to a good launch.
