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Tuesday, July 23, 2024

Celine posts explosive growth in Korea as Louis Vuitton, Rolex underwhelm

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The four most popular luxury brands in Korea — Hermès, Chanel, Louis Vuitton and Dior — saw a decline in operating profit last year, but Celine saw a whopping 591 percent increase thanks to growing brand appeal among youngsters attracted by relatively affordable prices and K-pop star appeal.

The LVMH-owned brand has a growing presence in the Korean market as big K-pop names like Blackpink’s Lisa and BTS’s V were appointed as brand ambassadors.

Celine Korea’s operating profit rose to 17 billion won ($12.4 million) in 2023 from 2.5 billion won the previous year, while revenue rose sixfold to reach 307.2 billion won last year, up 513.2 percent from 50.1 billion won in 2022.

BTS’s V, left, Blackpink’s Lisa, middle, and actor Park Bo-gum posing as Celine’s global ambassadors [JOONGANG ILBO]

However, the total operating profit for the four brands last year was 1.1 trillion won, down 19 percent from the previous year.

“Rising costs for materials, advertising and marketing, coupled with economic factors like interest rates, hindered any increase in new consumers, particularly from the generation born between the early 1980s to early 2010s,” according to a local media report citing an industry insider.

The combined sales of the top four foreign luxury brands in Korea amounted to around 5.2 trillion won in 2023. This marks the second time their sales have surpassed 5 trillion won, following 5.1 trillion won recorded in 2022.

Chanel Korea logged revenue of 1.7 trillion won in 2023, up 7 percent from the previous year. With the robust sales, Chanel was the biggest earner in Korea, snatching the title from Louis Vuitton. Its operating profit declined 34.1 percent to 272.1 billion won in 2023.

Louis Vuitton Korea posted revenue of 1.65 trillion won last year, down 2.4 percent on year. Louis Vuitton is the only brand to see a decline in both revenue and operating profit among the four luxury brands, as its operating profit also fell from 417.7 billion won to 286.7 billion won, dropping 31 percent.

NewJeans member Danielle's photo shoot as Celine brand ambassador in W magazine [SCREEN CAPTURE]
NewJeans member Danielle’s photo shoot as Celine brand ambassador in W magazine [SCREEN CAPTURE]

Christian Dior Couture Korea saw a 12.4 percent increase in its revenue in 2023, reaching 1.05 trillion won. However, its operating profit dropped by 3.6 percent to 312 billion won.

Hermès Korea was the standout performer, with revenue of 797.2 billion won and an operating profit of 235.7 billion won, up 23 percent and 12 percent, respectively, from the previous year.

“Hermès has not relied heavily on high-profile advertising, which may have reduced its financial burden,” a local media report said, citing an industry source.

Celine ended its contract with Shinsegae International and established Celine Korea, a domestic subsidiary, to directly enter the Korean market earlier last year. Shinsegae International had been importing and distributing the brand’s products since 2012.

“A direct market entry in Korea allows overseas luxury brands to increase their profit margins, as they don’t have to work with distributors,” according to a local news report.

Meanwhile, Shinsegae International saw a significant decline in its performance, affected by the departure of Celine. The company’s revenue dropped by 12.8 percent to 1.35 trillion won, and its operating profit plummeted by 57.7 percent to 48.7 billion won.

The imported brands reportedly account for 60 percent of Shinsegae International’s sales.

“Celine items are increasingly popular among the younger demographic, with most customers in their 20s and 30s. The trend is so strong that even customers in their 50s, 60s and 70s are following suit,” noted a source at a local importer of luxury designer brands.

She further stated that influencers and K-pop stars frequently showcase these products, giving the brand a trendy image. Additionally, these items are relatively more affordable than those from the four luxury brands, making them more accessible. This has made the Celine store one of the busiest in Korea these days.

In March, Celine named NewJeans member Danielle as the newest global brand ambassador.

The label announced back in September 2020 that it appointed Blackpink’s Lisa as its global ambassador, a decision that boosted Celine’s appeal with young K-pop fans across the world. BTS member V and actor Park Bo-gum, who are also popular with the younger generation, were selected as brand ambassadors.

In contrast to the top-tier luxury brands, some jewelry brands saw a decline in the domestic market, a trend that is particularly evident in the jewelry and watch sectors.

Tiffany’s revenue dropped by 2.3 percent to 350.9 billion won, and its operating profit fell by 1.7 percent to 21.6 billion won.

Bulgari’s revenue decreased by 2.8 percent to 339.9 billion won, while operating profit declined by 8.4 percent to 47.7 billion won.

High-end watch brand Rolex also experienced a slowdown, with revenue falling by 1.6 percent to 294.4 billion won and operating profit plummeting by 85.9 percent to 4.6 billion won.

BY CHOI HAE-JIN [choi.haejin@joongang.co.kr]