d’Alba Global has successfully transformed from a K-beauty brand known for its hit flight attendant mist into a global multi-channel, multi-product beauty powerhouse.
The company has seen robust sales of various products, including suncare, multi-balms, and creams, in North America and Europe. Its growing online recognition has fueled an expansion of its local brick-and-mortar distribution network, significantly boosting profitability.
d’Alba Global Aims to Reduce Reliance on Mists While Expanding Suncare Segment
According to the Financial Supervisory Service’s electronic disclosure on Monday, d’Alba Global reported second-quarter sales of 186.86 billion KRW (about 138 million USD), a 45.6% increase from the same period last year (128.37 billion KRW or about 95.3 million USD). Operating profit soared to 47.24 billion KRW (about 35 million USD), up 61.6% year-over-year, marking the company’s highest quarterly performance to date. The operating profit margin climbed 2.5 percentage points to 25.3%.
The stellar performance was driven by overseas sales, which reached approximately 141.5 billion KRW (about 105 million USD), representing a 74% surge compared to the previous year. International revenue accounted for 75.7% of total sales, with North America and Europe experiencing dramatic growth of 174% and 242%, respectively.
The brand recognition gained from the First Spray Serum has catalyzed increased purchases of follow-up products like tone-up sun creams, multi-balms, and double creams, diversifying the revenue structure that was previously centered on mists.
For the first half of the year, d’Alba Global’s cumulative revenue hit 358.1 billion KRW (about 266 million USD), already reaching 68.9% of last year’s total annual revenue of 519.7 billion KRW (about 386 million USD).
In terms of product sales, mist revenue in the first half amounted to 151.4 billion KRW (about 112 million USD), remaining the largest category, but its share has decreased to 42.4%. This trend has continued from 46.0% last year, with projections of 54.0% for 2024. Meanwhile, suncare sales surged to 90.7 billion KRW (about 67.3 million USD), accounting for 25.3% of total revenue.
Online Success Boosts Brand Recognition, Creating a Virtuous Cycle of Expanding Local Retail Presence
The hit SKUs identified in various countries through online channels are now penetrating local offline distribution networks, widening overseas sales opportunities. In Vietnam, the tone-up sun cream has gained traction, while in Spain, Germany, Canada, and Australia, the multi-balm has emerged as a key selling product.
As of the end of Q2, d’Alba Global had approximately 9,000 overseas offline stores, an increase of over 1,000 from the previous quarter. Hana Securities estimates the number of overseas offline stores at about 9,607, up 3,539 compared to the same period last year.
In the U.S., d’Alba Global plans to expand its presence in Costco Wholesale Corporation from 225 stores to 625 stores by year-end. During a conference call, the company reported that it sells products in approximately 1,450 Ulta Beauty locations.
In Europe, the company has entered 100 stores of Spain’s Druni, and it is pursuing expansion into major local retail channels like Boots in the UK in the second half of the year.
In Japan, the number of stores in Matsumoto Kiyoshi has increased from 2,052 to 2,501, while Aeon Mall has grown from 315 to 480 stores. The company is also expanding its presence in local retail channels like KKV in China.
d’Alba Global’s strategy of securing product rankings and brand recognition through online channels before expanding into large offline distribution networks has laid the foundation for its overseas growth. This process has led to economies of scale and improved marketing efficiency, enhancing profitability.
In Q2, the business-to-business (B2B) sales share rose by 4 percentage points to 39%, while the cost of goods sold rate increased by 0.7 percentage points to 23.2%. The economies of scale and improved marketing efficiency also contributed to a reduction in selling and administrative expenses. The selling and administrative expense ratio decreased by 3.2 percentage points to 51.5%, and the marketing expense ratio fell by 4 percentage points.
VC Overhang Eases, But Founder’s Stake Decreases
As the company grows rapidly, its governance structure has attracted market attention. As of late June, Chief Executive Officer (CEO) Ban Sung-yeon held an 18.24% stake, which is expected to drop to 17.58% following the planned sale of 82,698 shares.
The combined stake of Ban Sung-yeon and seven related parties is estimated to be around 20%.
Before the initial public offering (IPO), major venture capital (VC) holdings accounted for 42.0%, but this figure has reduced to about 4% as of the end of the agreement on May 22, and the remaining shares have since been absorbed in the market. With the major VC shares effectively absorbed, concerns about overhang have diminished.
As of last month, institutions with long-term investment strategies, such as the National Pension Service, M&G, and FIL, have emerged as major shareholders. According to d’Alba Global, their respective holdings are approximately 9.4%, 7.7%, and 4.9%.
An industry insider commented that d’Alba Global is transitioning from a mist-centric brand to a global consumer goods company with country-specific hit products and local distribution networks. As its reliance on overseas markets increases, it will need to manage risks related to exchange rates, logistics, and geopolitics, as well as develop capital allocation and governance strategies that consider institutional shareholders.
