Korean beauty giant Amorepacific is likely to shut down its luxury skincare brand Sulwhasoo outlet located at Galeries Lafayette department store in Paris due to low sales, according to sources on Oct. 24.
“We are currently considering making some changes to Sulwhasoo’s portfolio in France. We have not decided to make any changes to our current operation (at Galeries Lafayette) yet," a Amorepacific official told The Investor.
In 2017, Amorepacific launched the outlet in Paris as part of its business expansion plans. At the time, the K-beauty giant was trying to shift its focus from China to other overseas market, including Europe, after being affected by Beijing’s economic retaliation against Korean businesses due to the feud over South Korea’s decision to deploy the THAAD anti-missile system.
Launching the store in the 107-year-old French department store where global cosmetic brands fiercely compete for the limelight was considered a symbolic move not just for the Korean company, but for the K-beauty industry that has long hoped for expanding overseas.
Back in 1988, the Korean company made its first foray into France with its cosmetics brand Soon, but scrapped it after posting over 5 billion won ($4.30 million) of operating losses. In 1990, it launched Lirikos after acquiring a local manufacturing factory but the brand also failed to appeal to French customers. After pulling out of France in 1995, the Sulwhawoo brand was Amorepacific’s latest attempt to enter the market.The company, however, had to eat crow as its sales have been struggling. In the second quarter this year, its sales in Europe posted 4.8 billion won, down 23 percent on-year due mainly to the increased costs and sluggish sales.
“(During the second half of this year), Amorepacific’s sales are expected to drop further by 9.2 percent and its operating loss is expected to be around 3.6 billion won,” Kim Hae-mi, an analyst from local brokerage Cape Investment & Securities said in her recent investment report.
“Amorepacific’s failure in Europe was pretty much obvious from the beginning as the French market is very closed to foreign brands, especially Asian ones,” said a beauty analyst, who wished to remain anonymous. “This also shows the limited influence that K-beauty brands have. It is not only the European market, but most of the Korean brands have failed to make a presence in the US market.”
By Song Seung-hyun and Kim Young-won (email@example.com) (firstname.lastname@example.org)