By Kwanwoo Jun


Shares of Amorepacific and its parent AmorePacific Group slumped Wednesday after posting weak first-quarter earnings in their flagship cosmetics business.

Amorepacific shares fell as much as 6.2% to 115,800 won ($86.25), and AmorePacific Group shares slid up to 8.7% to KRW33,050 in the early morning session. That underperformed the benchmark Kospi's 0.6% decline.

The retreat of the South Korean beauty-product conglomerate came after its flagship affiliate, Amorepacific, posted Tuesday a below-consensus operating profit that plunged 59% on year to KRW64.35 billion in the quarter ended March. Its net profit, although above the FactSet-compiled consensus forecast, also fell 25% on year to KRW89.70 billion in the quarter.

The South Korean make-up giant's frail earnings, largely resulting from declining cosmetics sales at duty-free shops and in China, prompted Citigroup to downgrade its earnings outlook for the company.

Citi analyst Paul Hwang said in a research note released Wednesday that he cut Amorepacific's target price by 18% to KRW132,000 while maintaining its neutral rating.

With no tangible sign of a near-term recovery in cosmetics sales at duty-free shops, the Citi analyst expects the company's fixed-cost burden could grow in the upcoming quarters given its re-branding campaigns for its Sulwhasoo and Innisfree brands in China.

Amorepacific's cosmetic sales in China during the first quarter fell more than 40% from a year earlier.


Write to Kwanwoo Jun at kwanwoo.jun@wsj.com


(END) Dow Jones Newswires

05-02-23 2240ET