 A customer tries out a sample at the AmorePacific counter at Hyundai Department Store in Apgujeong, in this file photo. / Korea Times file |
By Cathy Rose A. Garcia
Staff reporter
At the Lotte Department store in downtown Seoul, several women make a beeline for the Sulwhasoo and Hera counters to buy face creams that promise radiant and glowing skin, some of which retail for more than 200,000 won ($175).
Across the street in Myeongdong, an Aritaum shop is filled with tourists, jostling to buy AmorePacific moisturizers, Laneige make-up and Iope eye creams. A few steps away, Etude House, with its candy pink interiors, and the nature-inspired shop Innisfree are even busier, as young women buy more reasonably priced lipsticks and skin products.
What do all these brands have in common? These are all manufactured by Korea's leading cosmetics company AmorePacific.
AmorePacific, which accounts for 35 percent of Korea's cosmetics market, is enjoying brisk business. In the first quarter of the year, the company posted 109.9 billion won net profit, a 30 percent increase from 84.5 billion won in the previous year. Sales reached 535.7 billion won in the first quarter, a 16 percent increase from 462.8 billion won sales in the same period last year.
``Despite last year's high base, AmorePacific was able to achieve the greatest quarterly results yet with double-digit growth based on an advanced distribution structure and strengthened brand power,'' the company said, in a report.
Luxury cosmetics sales, which include the high-end brands Sulwhasoo and Hera, accounted for 63 percent of total cosmetics sales. The new whitening products of Sulwhasoo and Hera proved to be very successful, showing strong sales.
AmorePacific is making headway in its efforts to gain a strong foothold in the global market. Its products are available in China, Japan, Hong Kong, Taiwan, Malaysia, Thailand, Singapore, Canada, France and the United States.
However, the strengthening won has had an impact on its overseas sales. Overseas sales in the first quarter only grew by 4 percent to 67 billion won from 64.3 billion won.
China, which represents 49 percent of overseas sales, showed 5 percent growth in sales to 32.9 billion won. This was attributed to growing brand awareness and store expansion, as Laneige and Mamonde are now available in more department stores and specialty shops.
The strong won also affected AmorePacific's sales in the rest of Asia and the U.S. Sales in the rest of Asia (excluding China) slumped to 16 percent to 12.5 billion won, from 14.9 billion won, while sales in the U.S. dropped by 4 percent to 2.6 billion won.
Sales in France, which represents 28 percent of overseas sales, soared by 25 percent to 19 billion won, due to the launch of a new perfume from its Lolita Lempicka brand.
Moving forward, a strong won is seen to have a continuing impact on AmorePacific sales in other countries.
It also appears that AmorePacific is trying to increase the efficiency of its overseas operations. The company announced it established an overseas holding company AmorePacific Global Operations, in Hong Kong. The wholly owned subsidiary will handle all the overseas operations of its 11 overseas units in China, Thailand, Taiwan, Hong Kong, Japan, Europe, Singapore and Malaysia.
In a statement, the company said the move will increase management efficiency of its overseas subsidiaries. There will also be a tax shield effect through the utilization of the subsidiary.
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