이 기사는 2021년 09월 29일 08시08분 thebell에 표출된 기사입니다

Modern House, a South Korean household goods retailer owned by private equity firm MBK Partners, has seen robust earnings growth in the first half of 2021 driven by rising online demand for home furnishing and decor, setting the company for strong full year results.

The company, operated by MH & Co, is believed to have recorded an operating profit of 12.4 billion won ($10.5 million) in the first half of the year, up 67% year-on-year, while revenue is believed to have risen 7% to 179.4 billion won in the same period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) are estimated to have grown 30% year-on-year to 25.1 billion won in the six months through June, with a full year EBITDA expected to easily exceed 50 billion won considering that the company’s second half performance tends to have been stronger than that of the first half in prior years.

MBK Partners acquired Modern House in August 2017 from retail giant E-Land. The investment was aimed at creating synergies with supermarket chain Homeplus, the firm’s another portfolio company in the retail sector with 142 stores across the country.

The private equity firm initially predicted that such synergies would help more than double the home goods company’s sales in a short period of time. However, the strategy faced a challenge as traditional retailers including Homeplus have been hit hard by rising labor costs and the rapid shift of consumer behavior to online.

Modern House has showed mixed financial performance trends in recent years. Its revenue grew from 335.4 billion won in 2018 to 359.7 billion won in 2019 before declining to 347.4 billion won in 2020.

In the same period, the company recorded operating losses of 3.8 billion won in 2018 and 9.4 billion won in 2019 but swung to an operating profit of 17.8 billion won in 2020. EBITDA have been on an overall upward trend, from 31.9 billion won in 2018 to 31.4 billion won in 2019 and 41.9 billion won in 2020.

The improvement in profitability in 2020 coincides with a surge in demand for home furnishing with people continuing to stay more time at home during the Covid-19 pandemic. According to the country’s statistics agency, the domestic home furnishing market is predicted to grow from 13 trillion won in 2017 to 18 trillion won in 2023.

Modern House has been stepping up efforts to expand its omnichannel presence in order to diversify sales channels beyond offline and capitalize on the shift to online shopping accelerated by the pandemic.

Modern House’s products are now sold on ecommerce platforms such as Ohouse, Coupang and Tmon, as well as other shopping malls such as TenByTen, LF Mall and Shinsegae TV Shopping.

As a result, the company’s revenue from online channels grew nearly 68% year-on-year in the seven months through July this year.

At the same time, Modern House has continued to expand the number of its offline stores by establishing strategic partnerships with retail majors including Lotte, Hyundai and Starfield. The company’s revenue coming from stores within the three retailers’ shipping malls increased 53% year-on-year in the first half of this year.

The company has been active in launching new brands, rolling out kitchen wares brand Linen & Kitchen earlier this year. It has also been focusing on managing costs associated with logistics to maintain profitability. (Reporting by Hee-yeon Han)