Despite constant growth, Able C&C not bullish about overseas markets
Published : 2013-02-27 20:27
Updated : 2013-02-27 20:27
Able C&C, which owns low-priced cosmetic brand Missha, said Wednesday its sales last year hit a record 452.3 billion won ($416.3 million), keeping its No. 1 spot among cosmetic brand shops.
The company said its sales and net profit jumped 61 percent and 51 percent, respectively, from 2011, on booming sales of its high-end skin care products.
Missha’s “The First Treatment Essence” sold over 1.5 million bottles within just 15 months of its launch, and “New Science Activator Ample” sold 1 million bottles in 12 months.
This year, Able C&C plans to open about 100 more Missha shops in Korea in addition to the current 613, with a sales target of 546.1 billion won, over 92 percent of which is expected to be domestic. It aims to reach 1 trillion won in sales by 2017.
Overseas, Missha is sold in 1,121 shops such as Watson’s drugstores and Missha brand shops across 31 countries including China, Japan, the U.S., Romania, Saudi Arabia and Russia. Nearly half of the stores are in China, and 44 percent in other parts of Asia. However, only about 100 of the stores in China are Missha’s own brand shops and the rest are cosmetic stores that sell some of its products.
Able C&C chairman Seo Young-pil was cautious about his ambitions in the overseas markets.
“I am not optimistic about our overseas business since we are faced with much tougher conditions. Doing business in China is hard because their rules change every day and there are too many risks for foreign firms,” Seo said in a press conference Wednesday.
“Also, China and Japan have cosmetic brands from all around the world. Our goal abroad is not to make great progress, but to survive by generating a stable operating profit.”
Seo also said Missha, currently No. 3 in the domestic cosmetics industry, will have to beat LG Household & Healthcare in order to stay in the industry for long. LG’s sales from cosmetics amounted to 1.5 trillion won last year.
Seo attributes Missha’s success last year to aggressive marketing through comparisons with foreign cosmetic products, generous regular sales and two-way communication with customers through its Beautynet website.
Missha holds a 20 percent discount sale called “Missha Day” every month, and sales of up to 50 percent off every year in July and December.
Despite its huge sales increase, Able C&C’s operating profit lingers at around 10 percent of sales due to the chairman’s policy to not rake in more than that.
When the company earns much more than 10 percent of sales, it gives out bonuses of up to 50 percent of annual salaries to its 260 employees and invests more in marketing.
This year, Able C&C expects the domestic cosmetics market to grow by about 4 percent to 10.1 trillion won as more conglomerates enter the drugstore business, sales of expensive brands sold in department stores weaken, and the growth of demand for men’s cosmetics continues.
Established in 2000 initially as an online brand, Missha opened its first brand shop two years later near Ewha Womans University. Its sales broke the 100 billion won mark in 2004, and slightly faltered until 2007.
But with diverse sales strategies, expansion of its retail network through subway stations at home, star products such as BB cream and mascara, Able C&C’s sales grew nearly sixfold from 78.5 billion won in 2007. It launched two other brands ― A’pieu targeting consumers in their late teens and early 20s in 2011 and online manicure brand Mika this year.
The company’s stock price jumped from 3,200 won in 2009 to over 70,000 won per share at present.
“The price-to-earnings ratio of Able C&C is about 14, less than that of most other cosmetics firms which hover around 20. We believe our stock price can go higher,” said Lee Kwang-yeol, vice president of Able C&C.