Korea's fashion giants quietly outshine luxury labels

Major fashion companies posted strong second-quarter earnings, buoyed by improved consumer sentiment.

According to the Financial Supervisory Service's DART system, Hansome, an affiliate of Hyundai Department Store Group, reported second-quarter sales of 363.2 billion won ($254 million), up 7.4 percent from the same period last year. Operating profit jumped sixfold — 525 percent — to 4.6 billion won.

First-half cumulative sales rose 7.7 percent year-on-year to 773.6 billion won, while operating profit jumped 82.7 percent to 41.1 billion won. The first-half operating profit margin improved 2.2 percentage points to 5.3 percent.

Breaking down second-quarter sales by channel, offline revenue — led by department stores — grew 8.7 percent year-on-year, with its share of total sales expanding from 77.8 percent to 78.8 percent. Online sales rose 2.3 percent, accounting for 20.9 percent of the total.

Hansome operates brands including Time, Mine, System, Time Homme and System Homme, and also carries luxury labels such as Lanvin and Bally alongside trendy imported contemporary brands including Our Legacy and Fear of God.

"Strong foot traffic at department stores drove continued high growth in core domestic brands such as Time, System and The Cashmere, as well as newly introduced import brands," a Hansome official said.

Samsung C&T's fashion division posted second-quarter sales of 593 billion won, up 16.3 percent year-on-year. Operating profit jumped 63.6 percent to 54 billion won from 33 billion won. The operating profit margin reached 9.1 percent, a gain of 2.5 percentage points.

Growth was driven by a combination of flagship and new brands, while tighter discount management — raising the share of full-price sales — also lifted profitability.

The industry is riding a wave of optimism after two of the so-called "Big Five" fashion companies — Samsung C&T Fashion, LF, Hansome, Shinsegae International and Kolon FnC — delivered strong results in tandem.

F&F, which owns brands including MLB, Discovery Expedition and Duvetica, also saw second-quarter sales and operating profit rise 5.5 percent and 2.9 percent, respectively, year-on-year. Other players are expected to have posted similarly solid growth in the quarter.

The gains reflect rising foot traffic at department stores and shopping malls driven by improving consumer sentiment, which has translated into stronger apparel spending. According to the Ministry of Statistics, the retail sales index for clothing reached 122.2 (base year 2020=100) in June, up 6.5 percent from a year earlier. The index for footwear and bags rose 1.7 percent to 122.0.

However, concerns are mounting that consumer sentiment could soften again from the third quarter onward amid a sluggish economy and weak stock markets, making earnings defense a top priority. Companies are also expected to press ahead with global expansion efforts.

Hansome has been steadily building its international presence — opening a permanent System store in the men's section of Galeries Lafayette in Paris in January and securing a spot for Time on the official women's calendar of Paris Fashion Week.

LF is accelerating its overseas push behind its flagship brand Hazzys, which surpassed 1 trillion won in combined domestic and international sales last year and now operates more than 800 stores worldwide, including in China and Russia. The company recently held a global trade show to scout new markets.