1. Clio’s Q1 2025 Performance: Missing the Mark

Clio reported KRW 82.1 billion in revenue and KRW 3.5 billion in operating profit for Q1 2025, missing market expectations by 4% and 34%, respectively. Operating profit, in particular, saw a significant decline of 59% year-over-year, highlighting the severity of the profit squeeze.

2. Analyzing the Underperformance: Increased Competition and Weakening Consumption

The underperformance can be attributed to intensified competition in both domestic and international markets, coupled with weakening consumer sentiment. Despite high marketing expenditures, Clio’s revenue growth has slowed. The continued sluggish performance in the Chinese market is another contributing factor.

3. Positive Factors and Growth Potential: Global Expansion and New Business Ventures

Despite the setbacks, Clio still has positive aspects. The company is experiencing steady growth in overseas markets such as Japan and North America. Its diversified brand portfolio and solid cash flow can serve as a foundation for future growth. Furthermore, Clio’s entry into new business areas like health functional foods is attracting attention as a potential new growth engine.

4. Investment Strategy: Proceed with Caution, Monitor Key Metrics

In the short term, Clio’s stock price is likely to face downward pressure. Investors should proceed with caution and closely monitor key metrics, including marketing efficiency improvements, growth in overseas markets, and the performance of new businesses. It’s advisable to consider reinvesting only after seeing clear signs of a turnaround in earnings and tangible results from profitability improvement efforts.