[THE INVESTOR] SKINFOOD announced on Oct. 8 that it has filed for court receivership due to its mounting losses.
“Although we are having some difficulty in securing liquidity due to excessive debt, we received some market reviews that our brand and products still have some value to maintain our business here,” a company official said in a statement. “So, we decided to file for receivership to normalize our business for the benefit of everyone, including our creditors.”
Established in 2004, SKINFOOD was ranked as one of the top three budget beauty brands here in 2010, with sales reaching 164.2 billion won (US$147.30 million). However, the Korean cosmetics maker has suffered losses since 2014. Its sales dropped 25 percent from 169 billion won to 126.9 billion won on-year in 2017, while its operating loss reached 1 billion won.
Early this month, the Daegu District Court accepted a request for injunction against SKINFOOD’s parent company iPEERES Cosmetics factory in Anseong, Gyeonggi Province, which was filed by 14 subcontracters for not paying them for the goods provided since May last year.
SKINFOOD’s fall was mainly due to increasing competition from other Korean cosmetic brands like Innisfree and Missha, which offer similar products at discounted prices.
Moreover, the trend of Korean customers mainly shopping at health and beauty stores, which sell differentiated budget cosmetics brands, has made the situation more difficult. The company also bore the brunt of Beijing’s economic retaliation following the deployment of a THAAD missile system.
With its fortunes declining, speculations about SKINFOOD shutting shop have constantly appeared this year. More so in July, when customer complaints about some of its flagship products being out of stock for months started to rise.
By Song Seung-hyun (firstname.lastname@example.org)