Has it hit bottom? LG H&H’s The History of Whoo rebounds after three quarters

[Financial News] LG Household & Health Care is drawing attention as it looks to accelerate its earnings recovery, buoyed by a rebound in its flagship brand, The History of Whoo. Sales in China, a key market, declined, but domestic sales are recovering, led by duty-free channels, which is a positive sign. If the brand succeeds in rebounding this year after hitting a sales low in the low 1-trillion-won range last year, expectations for next year’s performance are likely to rise further.
According to industry sources on the 10th, third-quarter sales of LG Household & Health Care’s The History of Whoo totaled 204.8 billion won, up 14.4% from the same period a year earlier. Sales rebounded after declining for two consecutive quarters, marking a turnaround in three quarters. However, amid weak sales in the first half of this year, cumulative sales for the first three quarters reached only 728.9 billion won, down 12.2% year over year.
The quarterly sales rebound is attributed to a base effect from the rationalization of the duty-free channel last year. Since the second quarter of last year, LG Household & Health Care has been seeking to reduce the share of sales from Chinese daigou traders, who mainly buy products for discount-led resale. After stepping up its rationalization efforts in the following quarter, the third quarter of last year, The History of Whoo’s sales that quarter fell below 200 billion won. It was the first time since the start of the 2020s that the brand’s quarterly sales had fallen into the 100-billion-won range. A decline in the won–dollar exchange rate also helped domestic duty-free sales post triple-digit growth.
By contrast, performance in China was weak. Third-quarter sales of The History of Whoo in China were in the 110-billion-won range, down more than 20% from the same period a year earlier. The brand is also working to improve local profitability by scaling back promotions such as livestream commerce with Chinese influencers (wanghong) and boosting sales through official channels. Losses at its China subsidiary, which have continued for several years, are cited as a cause. LG Household & Health Care Trading (Shanghai) Co., Ltd. posted a net loss of 47 billion won last year, widening its loss from 11.9 billion won the previous year and continuing to accumulate deficits.
The outlook for fourth-quarter results is also positive. Although adjustments to daigou volumes are not yet complete, analysts expect the base effect from the aggressive restructuring carried out in the second half of last year to continue into the fourth quarter. With exchange-rate conditions still favorable, The History of Whoo’s sales are expected to reach the low 1-trillion-won range this year, as they did last year, if fourth-quarter sales match last year’s level. If sales grow from last year, the brand could rebound this year after hitting bottom last year.
The History of Whoo’s performance is also expected to be a key factor in LG Household & Health Care’s results next year. The company remains highly dependent on the brand for cosmetics sales, as growth of the next generation of core brands is still at an early stage. Dr.Groot and The Face Shop are accelerating their expansion into major channels, with placements at Sephora and Ulta Beauty in the United States, respectively. LG Household & Health Care’s sales in North America have already surpassed its sales in China this year. If the diversification efforts of CEO Sunjoo Lee, who recently marked one year in the role, begin to bear fruit in earnest next year, the brands are expected to grow into major brands alongside The History of Whoo.
An industry source said, “The company has sold Avon and is moving quickly to expand in North America with a focus on its own brands, but it remains highly dependent on The History of Whoo, so it will take time for its diversification efforts to bear fruit.”
[email protected] Kang Myeong-yeon Reporter