April 26, 2024

• 

[THE INVESTOR] Korean beauty conglomerate Amorepacific will post sluggish earnings in the first quarter, according to industry watchers on April 18.

Following the Chinese government’s retaliatory measures against Korea for deploying THAAD, the number of Chinese tourists has fallen 9 percent in the first quarter and 39.4 percent in March on-year, according to the Ministry of Culture, Sports and Tourism. 

This was a heavy blow to the beauty giant’s income from duty-free sales which contribute over 35 percent to its profits and more than 80 percent of the sales comes from Chinese tourists, according to Han Guk-heui, an analyst at NH Investment and Securities. 

Its major sales channel Aritaum also suffered lower domestic sales following competition from health and beauty stores, said Lee Seon-hwa, an analyst at Eugene Investment and Securities. 

The market size has more than doubled in the last three years, and is estimated to reach 1.7 trillion won (US$1.49 billion) this year, while the number of its outlets has plateaued at 1,350 in the fourth quarter of 2015, noted the analyst. 

The lack of hit item since the launch of IOPE’s Air Cushion in 2008 also affected earnings.

Analysts estimate that Amorepacific’s operating profit in the first quarter will slip 0.59 percent on-year to 335.8 billion won. Revenue will rise 7.16 percent to 1.59 trillion won while net profit will fall 0.3 percent to 262.2 billion won from a year ago.

By Hwang You-mee (glamazon@heraldcorp.com)