April 20, 2024

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Its third-quarter earnings will widely miss market expectations, with 1.18 trillion won revenue and 95.7 billion won operating profit, down 15.5 percent and 41.9 percent on-year, respectively, said analyst Han Guk-heui, adding that factoring in the cost of toothpaste recall in the same period last year, operating profit actually halved.

Duty-free cosmetics sales, which accounted for 40 percent of the whole company’s operating profit until last year, is suffering extensively from the sharp decline in Chinese tourists, and will continue to spiral downward as much as 65 percent in the third quarter, estimated the analyst. 

Although sales in mainland China are picking up it is still far from returning to double-digit growth, and in addition, its brands and channels are deteriorating, noted Han forecasting that its earnings will remain slow. 

Unless there is a dramatic change in the industry, it will not be easy to regain its appeal, said the analyst maintaining a “hold” recommendation. 

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