One of South Korea's most successful domestic outdoor apparel and equipment brands announced last week plans to expand abroad to reignite growth in another sign that the party has ended four western outdoor brands that have piled into the country.
Nepa Co. Ltd. plans to open stores in China and Europe in coming years in a bid to grow sales of its Nepa outdoor apparel beyond its native South Korea, where sales rose just 0.6 percent to 473.2 billion won ($426 mm) following five years of double-digit growth. Operating profit declined 20 percent.
Nepa plans calls for reaching $1.19 billion in annual sales by 2020, CEO Park Chang-kun announced during an April 6 press conference in Seoul.
The expansion kicks off in July with the opening of a store in Chamonix, France. Store openings are planned for Beijing and Shanghai later in the year.
Nepa's sales have grown roughly 80 percent since 2011, a year before it raised $162.4 million by selling a minority equity stake to the Asian private equity firm Unitas Capital. At that time, NEPA designed approximately 500 SKU’s of outdoor apparel and equipment each year and distributed its products through an exclusive retail network of over 300 directly operated and franchised stores in South Korea. Nepa's same-store sales increased 40 percent in 2010 and 2011, Unitas said at the time.
Unitas estimated annual retail sales of outdoor products reached about $3 billion in 2011. However, last month Columbia Sportswear announced reserves for inventory markdowns in its South Korean business dragged down fourth quarter gross margins by about 100 bps in the fourth quarter. COLM said intense competition had slowed growth in the country and that it was reshuffling management .