Sales slump: LG H&H outlines new strategies for five brands across luxury, premium segments amid disappointing results

In Q3, LG H&H’s beauty sales decreased by 15.1% to KRW670bbn while operating profit tumbled by a whopping 88.2% to KRW8bn.

This was attributed primarily to the sluggish recovery in China as well as a slum in travel retail.

The South Korean conglomerate announced that it would prioritise its investments in its key beauty brands, including The History of Whoo, SUM37, O HUI, CNP, Belif, and The Face Shop.

The firm said during its third quarter (Q3) earnings announcement that it would continue investments in Whoo, its luxury flagship, to strengthen its position in the luxury market.

In August, Whoo unveiled the renewal of Cheongidan for the first time since its launch 13 years ago with a global launch event held in Shanghai China.

The new serum, Cheongidan Pro was enhanced with a new formula and new packaging to improve consumer experience, said the brand. The relaunch aimed to “expand customer based by being trend-sensitive while retaining The Whoo’s unique heritage”.​

It also plans to optimise its offline operations in China for luxury brands SUM37 and O HUI as its prepares both brands for rebranding.

Luxury beauty accounts for 76% of total beauty sales for the company, with Whoo accounting for 55% of all sales.

On the other hand, SUM37 and O HUI account for 3% and 4% of total sales respectively.

Furthermore, it also aims to capture what it believes is growing demand for clean beauty with Belif and The Face Shop. 

The firm said it would seek growth opportunities for both brands in the premium markets of North America and China.

Lastly, it hopes to nurture CNP domestically and overseas in the ‘high growth potential’ derma market.

The company observed improvements domestically, but the gains were not enough to offset the losses in China and travel retail.

Overall, LG H&H recorded a sales decrease of 6.6% to KRW1.746bn and an operating profit decline of 32.4% to KRW128bn

Expectations from Hince acquisition​

Additionally, the company highlighted the potential of strengthening its position in the colour cosmetics sector with its acquisition of makeup brand Hince.

In September, LG H&H announced that it had acquired the management rights to VivaWave Co., the parent company of Hince.

The deal was signed in September and the acquisition of 75% of the company is due to be completed this November. The company can exercise a call option to acquire the remaining 25% from three years of the initial acquisition.

With Hince, the company will focus on expanding domestically and in Japan, targeting millennials ang Gen Z groups.

Aside from expanding its base of millennial and Gen Z consumers, the firm expects Hince to expand its position in the mid to high-priced cosmetics segment.

Furthermore, the company said it hopes to tap into Hince’s product development capabilities to foster more innovation among its own existing brands.