이 기사는 2022년 04월 27일 07:40 thebell 에 표출된 기사입니다.

South Korean beauty conglomerate LG Household & Health care is expanding its footprint in the North American market to reduce its reliance on the Chinese market.

LG Household & Health care has recently signed an agreement to acquire a 65% stake in Los Angeles-based cosmetics brand The Crème Shop for $120 million (148.5 billion won). The Crème Shop, which is targeting young customers, has seen sales jump by 30% on average over the past three years.

LG Household has diversified its business portfolio through active mergers and acquisitions (M&A) deals. The company acquired U.S.-based The Avon Company, previously known as New Avon, in 2019 and purchased Physiogel’s business rights in Asia and North America in 2020. It also bought Boinca, an American hair care product manufacturer last year.

It is notable that LG Household was desperate to establish a springboard to enter the U.S. market considering The Avon, which LG Household acquired for 145 billion won, was in capital erosion in 2019. The American company’s total equity stood at negative 55.4 billion won.

Having operated its offline channel through its U.S subsidiary, LG Household & Health Care America, LG Household tried to boost its sales by targeting both online and offline distribution channels in the U.S. through the acquisition of The Avon.

The problem was that LG Household’s brand awareness was a lot weaker in the U.S. than in China, which accounts for more half of its flagship brand Whoo’s global sales.

The acquisition of The Crème Shop, following Physiogel and Boinca, comes as LG Household is trying to reduce its heavy reliance on China, after suffering from weak sales there.

The Crème Shop saw its sales and net profit increase by 61.5% and 76.8% year-over-year to 47 billion won and 11.9 billion won in 2021. LG Household aims to create synergies with existing brands like The Avon for further growth.

LG Household had three entities in the U.S., including LG Household & Health Care USA, The Avon and Boinca as of the end of last year. The Avon also has a Canadian entity. LG Household plans to expand its North American business through the entities. (Reporting by Seon-ho Kim)