Amorepacific reported a consolidated operating profit of KRW4.2 billion (US$3.2 million) on sales of KRW904.8 billion (US$685 million) for the second quarter of 2024, marking a year-over-year decrease of 30% and 4%, respectively. These figures fell significantly short of market expectations, with consensus estimates predicting an operating profit of KRW71.5 billion (US$54 million). The disappointing performance is largely attributed to operating losses in China, which surpassed forecasts, resulting in a KRW50 billion (US$38 million) shortfall as the company restructures its Chinese operations.
In China, Amorepacific is grappling with operational challenges, including the reshuffling of online and offline channels, leading to a 44% drop in sales compared to the previous year. This decline is attributed to inventory adjustments in e-commerce and efforts to enhance the efficiency of offline stores. The company does not anticipate a significant improvement in its Chinese operations in the third quarter.
On a positive note, Amorepacific’s subsidiary COSRX reported a strong operating profit of KRW34 billion (US$25.7 million), contributing to improved margins in the U.S. and Southeast Asia. The inclusion of COSRX, along with brands like Laneige and Innisfree, led to a 65% increase in U.S. sales. However, the overall outlook remains cautious due to ongoing challenges in China.
