Management dispute brewing at leggings brand Xexymix operator Brand X?

A leadership change in Brand X Corp., the operator of South Korea’s top leggings brand Xexymix, is spawning speculation that a management control dispute is brewing at the athleisure maker.

According to Korea’s top financial market watchdog Financial Supervisory Service, the company recently changed its leadership structure from a joint CEO system, in which Kang Min-joon and Lee Soo-yeon, husband and wife, led the firm, to a single CEO system, in which Lee is the top leader.

Kang resigned from his CEO post last month and is currently an internal director. Kang and Lee divorced last year.

Brand X said it would sell non-core businesses, including Gelato Lab Inc., a nail art product maker led by former CEO Kang to focus on the Xexymix business.

He founded Brand X, an e-commerce company, in 2012 and launched the Xexymix brand in 2015.

Under the joint leadership, Kang handled Brand X’s future business projects, while Lee was responsible for the Xexymix brand.

RISE TO TOP

Athleisure, a portmanteau of athletics and leisure, has rapidly caught on among Korean females in recent years.

The domestic athleisure market, which features sportswear worn as everyday clothing, had belonged to Andar, an affiliate of Echo Marketing Co., until it lost the market leadership to Brand X in 2020.

Known in Korea for its utilitarian tops and leggings that customers wear daily, Xexymix competes with rivals Andar and Mulawear in the medium-priced activewear market.

Brand X’s sales have grown steadily, from 157.5 billion won ($117 million) in 2021 to 206.8 billion won in 2022 and 233.5 billion won in 2023, posting an average annual growth rate of over 14%.

Xexymix, the leggings brand, accounted for 93.2% of the company's total sales last year, solidifying its role as a key growth driver.

Xexymix is diversifying its business scope to clothing for golf, swimming and children to maintain its lead. It is also aggressively pursuing overseas expansion, opening a store in Shanghai last year.

Brand X has also established a corporation in Taiwan to enhance its presence there.

In Taiwan, there is a strong preference for K-culture and K-fashion, and the interest in and demand for athleisure sportswear there is growing.

The company said its athleisure brand Xexymix has made remarkable strides, spanning over 50 countries.

SHAREHOLDING STRUCTURE

While in the middle of their divorce last year, Kang, the husband, transferred 12% of his shareholdings worth 15.4 billion won to Lee last November.

As a result, Kang's stake in the company has dwindled to 30.05%, while Lee's stake has risen to 14.54%.

Industry watchers said a dispute might be brewing over the management control over Brand X.

Shares of Brand X have risen 36% for 20 days since Sept. 10 amid such speculations in the market.

Listed on the junior Kosdaq market, Brand X was trading up 0.2% at 10,109 won earlier on Friday in line with the Kosdaq index’s 0.4% gain.

A Brand X official, however, dismissed the possibility of a management dispute.

"Former CEO Kang, as an internal director, continues to work at the company as usual,” he said.

Write to Jeong-Cheol Bae at bjc@hankyung.com
In-Soo Nam edited this article.