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LG Household & Healthcare Co. Ltd. (CEO Suk Yong Cha) signed a contract to take over 100 percent of “Ginza Stefany Cosmetics Co. Ltd.,” a Japanese cosmetic brand, as a way to pursue the market progressively.
LG Household & Healthcare will pay JPY 9.1 billion (KRW 131.9 billion) for 70 percent of the company, and then make additional payments considering profits of the future three years for the last 30 percent of shares.
“Ginza Stefany Cosmetics Co. Ltd. (Ginza Stefany hereafter)“ was founded in 1992 in Tokyo, Japan, and generates KRW 100 Billion and more than 20 percent of operating revenue annually.
Based on Ginza Stefany and its know-how and experience, the company has secured a beachhead to advance into the Japanese market with cosmetic and household products.
LG Household & Healthcare looks for opportunities in the Japanese market, starting with detergent, fabric softener, and toothpaste products through TJI, the local distribution company to Japan. Last year, it established a strategic partnership with AEON, the largest retail channel, and opened more than 400 ”THEFACESHOP” stores. On the other hand, the fermentation cosmetic, “Sum,” is gaining popularity among Japanese consumers and started being offered through LOTTE dot com Japan.
Now, it plans to accelerate sales of ”THEFACESHOP” and “Sum” products through Ginza Stefany, and will pave the way for market penetration of “belief” and “Vov.”
＃Current status of Ginza Stefany
Ginza Stefany is a mail-order network selling mainly anti-aging skin care products, posting KRW 143.7 billion of sales and operating profit of KRW 28.1 billion (20% of margin) in 2010 and KRW 82.5 billion in sales and KRW 14.1 billion (operating margin of 17%) of profit in 2011. In 2012, it is expected to reach KRW 100 billion of sales and operating profit of 18 billion (18% margin).
Currently, it employs as many as 300 including management, and secured JPY 3.4 billion (KRW 49.3 billion) in cash and a 10-story corporate building in Ginza, Tokyo, as of the end of 2011, thanks to its profit-generating business.
Its major brands include World One and Pure’D 100, anti-aging cosmetic lines, and Beautiful Stefany, the organic product line.
＃Background and status of advance into the Japanese market
Japan’s cosmetic market is six times larger than that of Korea, totaling KRW 41 trillion, and the household market is second-largest in the world following the U.S., with KRW 21 trillion, which is seven times the Korean market.
Furthermore, it has been extremely difficult for a Korean brand to move into the market and find success as world-famous brands such as Shiseido, kanebo, Kose, and Kao dominate it.
However, conventionally stubborn Japanese consumers who were obsessed with specific brands are now moving toward a more open consumption style. In addition, the Korean Wave is sweeping Asia, drawing consumers’ attention to Korean products in the region.
LG Household & Healthcare has been operating corporate bodies in many Asian countries such as China, Taiwan, and Vietnam with a global strategy focused on the Asian region, but has been limited in Japan, the largest market nearby, by offering the products through local distribution channels.
By securing Ginza Stefany, LG Household & Healthcare will be able to increase sales in the Japanese cosmetic and household product markets, pursuing new business opportunities with its global strategy.