China, LG H&H’s pain in the neck amid global K-beauty boom
Hyung-Joo Oh
4 HOURS AGO
Chinese internet influencers at LG H&H’s launch event for new product of The Whoo in Shanghai in August 2023 (File photo by LG H&H) South Korean cosmetics giant LG H&H Co. has yet to benefit from the global K-beauty boom due to its heavy dependence on China, the world’s largest beauty product importer.
LG H&H known for its premium brand The Whoo said on Thursday its operating profit edged up 0.4% to 158.5 billion won ($114.4 billion) in the second quarter from a year earlier with sales down 2.7% to 1.8 trillion won. In the first half, its profit rose 1.9% while revenue dipped 0.1%.
That compared with smaller South Korean cosmetics makers, which enjoyed the growing K-beauty boom worldwide.
VT Co. famous for its skin care product Reedle Shot was forecast to have seen a 126.5% surge in operating profit and a 47.1% jump in sales during the April-June period, according to analysts, for example.
LG H&H, formerly LG Household & Health Care Ltd., focused too much on China, the sharply slowing world’s second-largest economy, industry sources in Seoul said.
The company’s cosmetics sales to China, including those in the mainland and at duty-free shops, made up 46% of its total beauty product revenue, according to Hyundai Motor Securities Co.
The Whoo failed again to get in the top five skincare brand list by sales at Tmall, an e-commerce platform operated by China’s Alibaba Group, during the annual 618 festival, the second-biggest shipping event in the mainland, last month.
The Whoo ad featuring Kim Ji-won, the heroine of the popular South Korean drama series Queen of Tears (File photo by LG H&H) ACQUISITIONS TO DIVERSIFY MARKETS
LG H&H tried to reduce its reliance on the Chinese markets through acquisitions.
LG H&H kept the door open for acquisitions of other companies to expand its presence in Asia ex-China and North America.
Its crosstown rival Amorepacific Corp. started benefitting from a takeover.
The beauty giant known for its premium brand Sulwhasoo was estimated to have enjoyed a 1,111% surge in operating profit with 8.2% growth in sales in the second quarter as earnings of Cosrx Inc. Amorepacific acquired were reflected in the company’s income on a consolidated basis, analysts said.
Cosrx, a South Korean cosmetics maker known for its snail mucin and other products, generated most of its sales in overseas markets.