ZINUS, a furniture manufacturing affiliate of Hyundai Department Store Group, will sell its production facility in Georgia and reorganize around production in Indonesia. The company sought to expand production in the United States, but failed to secure profitability due to high labor and fixed costs. Still, with production concentrated in Indonesia, some worry the company could become more vulnerable to future changes in U.S. tariff policy.
According to the Financial Supervisory Service's DART filing system on the 29th, ZINUS disclosed that on the 22nd its U.S. subsidiary (ZINUS USA INC.) decided to dispose of tangible assets including the land and buildings of its Georgia plant. The disposal amount is about 135.3 billion won. The company said the purpose of the sale is "to improve profitability and financial structure by selling a loss-making production facility."
ZINUS began in 1979 as Jinung corporations, a camping gear specialist. It changed its name to ZINUS in 2000 and, from the mid-2000s, shifted its focus to manufacturing and selling bed mattresses and furniture, finding success in overseas markets. At one point, it was the No. 1 player in the U.S. online mattress market with a share of more than 30%. Hyundai Department Store acquired ZINUS in Mar. 2022 for 879 billion won and is now the largest shareholder with a 38% equity stake.
ZINUS had already decided last Nov. to halt production at the plant. At the time, it said producing at its Indonesia plant and exporting to the United States was more favorable for profit and loss than producing in the United States. The Georgia plant was established in 2020 as a production base. Ongoing burdens from U.S. labor costs and logistics and incidental expenses made it difficult to secure profitability. A ZINUS official said, "The plant sale is about improving profitability and streamlining operations," adding, "Given our current profit and loss structure, leveraging the Indonesia production base is more efficient than producing directly in the United States."
ZINUS's mattress production is effectively centered on its Indonesia plant. Based on last year, the Indonesia plant produced 4.74 million units, accounting for most of total output. By contrast, the U.S. plant produced about 60,000 units. Early last year, ZINUS also sold its Zhangpu plant in China, continuing efforts to streamline production bases.
However, with the withdrawal from U.S. manufacturing and growing reliance on Indonesia, concerns about tariff risk are rising. Last year, the United States pursued a reciprocal tariff on products from Indonesia, initially floated at about 32% and later adjusted to around 19%. Still, the cost burden is higher than producing in the United States. Reflecting the U.S. tariff burden, ZINUS raised product prices, but order declines from major U.S. clients and weakening demand followed, leading to deteriorating results.
According to the Financial Supervisory Service's DART filing system, ZINUS's sales in the first quarter of this year were 139.6 billion won, down 44.2% from 249.9 billion won a year earlier. Operating profit swung to a loss, from a 27.5 billion won surplus in the first quarter of last year to a 30.1 billion won operating loss in the first quarter of this year. Net loss came to 22.8 billion won.
Mid- to long-term performance has also been sluggish. ZINUS's sales fell from 1.1596 trillion won in 2022 to 952.3 billion won in 2023, 920.4 billion won in 2024, and 913.2 billion won last year, steadily declining. With negative growth already in the first quarter this year, some say the annual results could face greater pressure.
Profitability on an annual basis has in fact worsened. Operating profit turned to a loss, from 18.3 billion won in 2023 to a 5.4 billion won operating loss in 2024, then partially recovered to 25.5 billion won last year. Although Hyundai Department Store Group invested about 879 billion won in 2022 to acquire ZINUS and push to expand its global and online living business, rising logistics costs, softening U.S. demand, and tariff burdens have combined to yield results that fall short of expectations, analysts say.
ZINUS is highly dependent on the U.S. market. Last year, exports accounted for 93.5% of total sales, and the United States made up 81.2% of that. The structure means U.S. consumption slowdowns and changes in tariff policy are bound to be reflected directly in results.
Industry officials view the pullout from U.S. production as an inevitable short-term choice. However, with production hubs reorganized around Indonesia, analysts say the structure is becoming more sensitive to future changes in U.S. tariff policy. A furniture industry official said, "If production shifts to an Indonesia-centered model, the impact of tariff variables could grow," adding, "It is said production efficiency efforts are underway, and alongside that, diversifying markets to reduce reliance on the United States will become more important."