Home News Amorepacific Faces Challenges as Cosmetics Sales Decline

Amorepacific Faces Challenges as Cosmetics Sales Decline

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Shares of Amorepacific Corp., a South Korean beauty-product company, plummeted on Wednesday following disappointing fourth-quarter results. The company’s earnings were weighed down by sluggish cosmetics sales.

Significant Share Drop

The stock of Amorepacific fell as much as 9.4% to 123,000 won ($92.54), marking its sharpest daily decline in over a year. In contrast, the broader Kospi index only dropped 0.2% during early trading.

Dismal Financial Performance

Amorepacific reported a worrying 64% year-on-year plunge in its operating profit for the quarter that ended in December. Over the course of the whole year, operating profit decreased by 50%. Furthermore, revenue dropped 15% in the December quarter compared to the same period the previous year, and 11% for the entirety of 2023. The company cited weaker cosmetics sales in Asia and underperforming duty-free shops at home as the primary reasons for these disappointing results.

Concerns for Future Earnings

An analyst from DB Financial Investment, Jehnah Huh, has expressed concerns that falling cosmetics sales, particularly in China, combined with increased marketing costs, may continue to impact Amorepacific’s earnings in 2024. Huh predicts that the company’s operations in China will continue to incur losses during the first half of the year.

Challenges Ahead

Given the weak earnings results and the anticipated prolonged business slowdown in China, Amorepacific’s stock is expected to face further losses in the near term.

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