Will He Turn Around Group's Slumping Fashion Business?

Lee Kyu-ho, the son of Kolon Group chairman Lee Woong-yeol, can win recoginition for his managerial ability if he turns around the group's slumping fashion business

When Kolon Group chairman Lee Woong-yeol announced on Nov. 28 that he would step down from all his posts within the group on Jan. 1 next year, he put his son and heir apparent Lee Kyu-ho to a severe test.

The junior Lee, 35, was appointed as chief operating officer of Kolon Industries FnC at the group’s year-end personnel reshuffle. Now attention is focusing on whether or not he can turn around the fashion business that has been mired in low growth.

Kolon FnC's performance has been on the downward trend since 2014 after peaking in 2013. Its sales dropped to 1.097 trillion won (US$969.9 million) last year following 1.249 trillion won in 2014, 1.152 trillion won in 2015, and 1.137 trillion won in 2016.

Its operating profit also decreased from 62.7 billion won (US$55.4 million) in 2014, 59.8 billion won in 2015, and 55.1 billion won in 2016 and 48.2 billion won last year.

The report card is also gloomy until the third quarter of this year. Its accumulated sales and operating profit for the first three quarters of this year are only 692 billion won and 15.3 billion won, respectively. Notably, it reported an operating loss of 6.4 billion won and a profit ratio of minus 3.3% in the third quarter, which is a 51.5% decrease compared to third quarter of last year.

Kolon FnC is likely to fail to attain annual sales of 1 trillion won for the first time this year. Usually, the fourth quarter results depend on the sales of high-priced padding during the winter season, but this year, the cold wave has been delayed from the previous year, raising a red flag for the company.

Against this backdrop, the chairman’s son has been deployed as a relief pitcher for Kolon FnC. He is expected to focus on revitalizing the company by reviving its brands. The company has decided to save the SUECOMMA BONNIE, its shoes brand that industry watchers predicted would be abolished at the end of this year due to poor performance.

Kolon FnC has selected actress Song Hye-kyo as a model for the shoes brand in the spring and summer season of next year. The company is determined to boost the popularity of the brand on the strength of the hot actress, who assumed a leading role in a TV drama that was recently begun.

The company has also started brand renewal efforts for the Kolon Sports, which is facing difficulties due to slumping outdoor markets in Korea, and the Head, an aging sports brand, with young consumers in mind.

Attention is focusing on whether Lee will succeed in reviving Kolon FnC. He joined Kolon Industries in 2012 and was promoted to director of Kolon Global in 2014 and executive of Kolon Corp., the holding company of the Kolon Group, in 2017.

Lee is credited with the rapid expansion of Liberto Inc., the group’s house sharing business unit. Established in January this year, Liberto expanded its size by operating 24 share houses in major areas in Seoul such as Yeouido, Cheongdam-dong and Samsung-dong, within a year.

Lee has been put to another tough test. If he successfully turns around the slumping fashion business, which is a core business of the group, he will win recognition for his managerial ability and establish himself firmly as the group’s next leader.

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