LG H&H’s Q3 OP jumps 52.4% as beauty business narrows losses

LG H&H Co. is showing signs of recovery in its beauty business, supported by stronger duty-free sales and a turnaround in its luxury brand The History of Whoo.

According to regulatory filings on Tuesday, LG H&H posted revenue of 1.58 trillion won ($1.18 billion) and an operating profit of 70.4 billion won in the third quarter. Revenue edged down 0.2 percent from a year earlier, while operating profit jumped 52.4 percent.

The most notable improvement came from the beauty division’s profitability. The segment reported revenue of 660.8 billion won, down 0.3 percent on year but narrowed its operating loss significantly to 10.9 billion won.

The History of Whoo returned to growth on higher duty-free sales, while major brands, including Dr. Groot, Dominas, Euthymol, and VDL also posted growth. The recovery in duty-free sales, combined with efforts to improve the efficiency of offline stores, helped boost profitability.

Overseas performance varied by region.

International revenue fell 12.5 percent to 432.3 billion won. North American sales declined 12.5 percent to 135.5 billion won, while revenue in China dropped 21.1 percent to 115.1 billion won.

The decline in North America partly reflected the sale of local subsidiary The Avon Company. LG H&H excluded Avon’s results from its financial statements starting in September following the divestment. Excluding Avon, however, North American revenue rose around 5 percent, the company said.

Growth was driven by Dr. Groot, the haircare brand expanding its local distribution network and gaining traction through retail and digital channels.

In China, sales continued to decline as the company reorganized its online business structure and focused on improving brand health.

The Home Care & Daily Beauty division posted revenue of 419.2 billion won, up 3.8 percent, while operating profit fell 3.1 percent to 31 billion won. Higher sales across major online and offline channels were offset by increased marketing expenses aimed at developing key products and strengthening brand competitiveness.

The beverage division saw declines in both revenue and operating profit.

The Refreshment segment reported revenue of 497.4 billion won and operating profit of 50.3 billion won, down 3.1 percent and 19.9 percent, respectively, from a year earlier.

Weaker beverage demand, rising raw material and packaging costs, and intensifying promotional competition weighed on profitability.

LG Household & Health Care plans to strengthen its growth foundation by improving product competitiveness and expanding overseas distribution networks. Dr. Groot entered more than 400 Sephora stores across the United States in August, expanding its local retail presence.

The History of Whoo is also seeking to broaden its global consumer reach by highlighting its technologies related to skin aging.