Namyeung Vivien, a 62-year old local underwear maker, saw its shares surging on July 23 following news that the company is up for sale.
Shares in the Kospi-listed company rose by a daily limit of 30 percent to 9,170 won in morning trade.
The company logged an operating loss of 3.9 billion won ($3.3 million) with total sales of 206 billion won in 2018. That compares to net profit of 500 million won with total sales of 209 billion won recorded in 2017. Amid plunging profits, the company cut its headcount from 393 to 236 employees while selling some facilities.
The company’s growth has been stalled amid competition with low-cost underwear by overseas companies such as Uniqlo and Victoria's Secret.
The company said in its latest annual report that “costs are increasing because the textiles industry is labor-intensive and we’re having difficulty finding profitability as we try to produce various types in a smaller quantity.”
“Traditionally, the domestic female underwear market had high entry barriers but recently many overseas brands are entering and intensifying the competition,” it said.
Industry sources said 75.85 percent of the total stake, held by the company’s Chairman Nam Seok-woo, the son of the founder, who owns 23.79 percent, and other family members and affiliates are up for sale.
Domestic rival Shinyoungwacoal is also suffering from growing competition. Sales and operating profits of the company best known for its Venus brand fell 6 percent and 87 percent, respectively, in 2018 from a year prior. Lazard Korea Asset Management is appointed as the manager for Namyeung Vivien’s deal.
By Park Ga-young (email@example.com)