CLIO Cosmetics, a domestic color cosmetics specialist, has recently reported poor performance despite the global K-beauty craze. The industry evaluates that the decline in new product launches, coupled with intensified competition from numerous indie brands, has led to a contraction in exports to major regions such as North America.
CLIO Cosmetics is considered a representative company of the domestic color cosmetics industry. Established in 1993, it has over 30 years of experience and is a first-generation K-beauty company. It holds prominent brands such as CLIO, Peripera, and Goodal. The company distributes products through various channels, including its own online store, health and beauty (H&B) stores, and both domestic and global online platforms. While it previously expanded exports to the United States, Japan, and Southeast Asia, it has seen growth slow since the second half of last year.
According to the financial information company FnGuide, CLIO Cosmetics is estimated to record a revenue of 86.6 billion won and an operating profit of 5.4 billion won in the second quarter of this year. This represents a 6.5% decline in revenue and a 43.8% decrease in operating profit compared to the second quarter of last year. If the estimates are correct, CLIO will post deteriorating results compared to the same period last year for four consecutive quarters starting from the third quarter of last year.
The main cause is cited as poor sales in the North American market. CLIO recorded revenue of 5.4 billion won in North America in the third quarter of last year, a decrease of about 27% compared to the same period the previous year. Revenue in North America also fell by 35.6% and 33% respectively in the fourth quarter of last year and the first quarter of this year, amounting to 6.5 billion won and 5.7 billion won.
It is evaluated that the absence of new products that could boost sales has led to the poor performance in the context of increasing competition in the market. Park Eun-jung, a researcher at Hana Securities, noted that "in overseas markets, basic cosmetics are attracting consumer interest with various new ingredient-based products, while trendy products and brands emphasizing packaging differentiation are being released in color cosmetics." She added that "the overall newness of CLIO products has weakened, contributing to the decline in revenue."
CLIO Cosmetics is focusing on launching new products targeting North America this year. In January, it released a North America-exclusive cushion product developed for 20 different skin tones through Amazon. In May, its lip specialty brand Peripera also launched a tint product exclusive to the North American region.
An industry insider noted that "domestic basic cosmetics are not limited by skin color in the export process, but color cosmetics are limited in color options, which may restrict overseas demand." They added that "to be competitive in the export market, it is essential to develop products tailored to the demographic characteristics of the region."
CLIO is also strengthening its basic cosmetics product line. In February, its basic cosmetics brand Goodal launched ampoules and creams made using Houttuynia cordata extract at Costco. In May, it introduced sunscreen products containing Jeju green tangerine ingredients to the North American market.
The company also plans to actively target the European market. CLIO has partnered strategically with the local distribution vendor Orientrade to expand its sales channels in Europe.
Peripera and Goodal entered Italy's largest fashion retail chain, OVS, in the first quarter of this year. Peripera has also entered the Italy branches of DM, a beauty and household goods drugstore chain with over 4,000 stores across Europe. Additionally, Goodal has entered about 1,300 stores of the major drugstore chain Kruidvat in the Netherlands and Belgium since last month.
Along with product expansion, CLIO is also ramping up its marketing efforts. The advertising costs incurred by CLIO increased from 10.2 billion won in the first quarter of 2023 to 14.9 billion won in the first quarter of last year, and to 16.4 billion won in the first quarter of this year.
The securities industry believes that CLIO Cosmetics will achieve a significant rebound in performance starting in the second half of the year. Park noted that "considering the overall attempts at change and the low base, profitability is expected to improve substantially starting in the fourth quarter."