Zero to Seven, a company specializing in infant and toddler products led by Kim Jeong-min, the third son of Maeil Dairies' founder, has conducted a restructuring. After reorganizing its fashion division in 2022, the company focused on cosmetics and packaging; however, with sluggish sales growth, it began to reorganize its organization.
According to a report by ChosunBiz on the 7th, Zero to Seven, which operates the infant cosmetics brand "Gungjung Bichaek," recently reduced its workforce during the organizational restructuring process. The decision came as revenue and operating profit worsened, prompting the company to initiate efforts to improve profitability.
Zero to Seven is managed by Kim Jeong-min, the third son of the late Kim Bok-yong, founder of Maeil Dairies. Formerly a subsidiary of Maeil Holdings, Zero to Seven merged with CK Packaging, a subsidiary of CK Corporations, in 2018, where Kim Jeong-min was the major shareholder.
As a result of this merger, the major shareholder of Zero to Seven changed from Maeil Holdings to CK Corporations. CK Corporations is a company that produces lids for milk powder cans, with Kim Jeong-min as the major shareholder. The assets of Maeil Holdings, which were inherited by the eldest son, Kim Jeong-wan, were entirely disposed of, completing the separation of the brothers' business interests.
Zero to Seven gained significant popularity in the infant and toddler clothing and cosmetics sectors, particularly in Korea and China. However, due to a decrease in birth rates, intensified competition in the domestic children's clothing market, and the impact of COVID-19, profitability fell, leading to the reorganization of its fashion business in 2022. Since then, the company has focused on its cosmetics business, led by Gungjung Bichaek, and the milk powder can lid production.
Despite reorganizing its fashion business, growth has stalled. Both revenue and operating profit significantly decreased. Revenue, which reached 90.3 billion won in 2022, fell to 69.4 billion won in 2023 and 66.8 billion won last year.
The operating profit in 2022 was recorded at 9.3 billion won but dropped by about 75% to 2.3 billion won in 2023. Last year, the operating profit was reduced to 1.5 billion won. The initial costs for exploring overseas markets, including the U.S. and Japan, also impacted these results.
Revenue from Gungjung Bichaek, which accounts for more than half of the business, continues to decline each year. Revenue from Gungjung Bichaek, which had approached 60 billion won, was 46.4 billion won in 2023 and approximately 36 billion won last year. At one time, Gungjung Bichaek accounted for 69% of total sales, but this percentage dropped to 54% last year.
An internal source noted, "I understand that Gungjung Bichaek has faced challenges in competing with other domestic infant and toddler cosmetics brands, which led to the reduction in personnel," adding, "There are also rumors of a second restructuring being planned."
The competition in the domestic cosmetics industry is becoming increasingly fierce. Natural Korea, a cosmetics manufacturer established in the early 2000s, and Organic Bridge, a cosmetics material research company, are also undergoing rehabilitation processes in the courts. Last year alone, the number of closures for cosmetics responsible sales companies reached 8,831.
Zero to Seven claims that this is not a restructuring. A representative from Zero to Seven said, "We have reorganized the organization for operational efficiency and revenue improvement, and there was a reduction in personnel during this process," adding, "We will focus our efforts on improving profitability with the restructured organization, and there are no plans for additional adjustments."