Is TonyMoly on shaky ground despite racking up international success of late?

By Michelle Yeomans contact

- Last updated on GMT

Is TonyMoly on shaky ground despite racking up international success of late?

Related tags: South korea

TonyMoly, reported to be South Korea's seventh-largest cosmetics brand by sales, has been fast expanding its global presence, yet some analysts reckon that a changeover of five CEO's in a two-year period could jeopardize its future success.

Since its establishment in 2006, TonyMoly has seen rapid growth in Asia and abroad, posting 310 billion won in sales from 600 offline outlets and online stores in 2014.

The brand is recognized for its fun, cheeky packaging and affordable pricing and is holding its own in the field of LG Household and Healthcare’s The Face Shop, AmorePacific’s Innisfree and ABLE C&C’s Missha. 

With plans now to invest $25 million in a factory in the eastern province of Zheziang to better reach Chinese customers, various industry analysts say these developments are all well and good but if the management team isn't solid, it may spell trouble ahead.

Shaky foundations?

The analysts that wish to remain anonymous are referring to a turnover of five CEO's in TonyMoly in the past two years, which is highly unusual even for a mid-sized company in Korea.  

The most recent appointment of ex AmorePacific employee, Yang Chang-soo was only eight months after the founding president Bae Hae-dong took the office in February. 

According to the Korea Herald, Bae taking the helm was seen as an emergency measure when former CEO Ho Jong-hwan resigned only a month after taking office in January. 

In September, 2013, former CEO Kim Joong-chun left the firm after three years of management.

Jeong Eui-hoon took up the baton but quit in eight months in May 2014, and Oh Sae-han managed the firm until he resigned in December 2014.

Speculation that the firm has been hiding its internal problems, possibly resulted by Bae’s micro-management, to get rid of any risks puts a question mark over the company maintaining its long term success.

When investors evaluate listed companies, the management plays a critical role in deciding the investment. For TonyMoly, it has not given clear explanations on CEO changes even in the past, and this would likely deal a blow to its brand image and investment​,” an analyst from KDB Daewoo Securities told the Korea Herald. 

Related topics: Business & Financial

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