Masks coming off, cosmetics stocks going up

A cosmetics shop at Lotte Department Store in central Seoul in July [YONHAP]

With mask mandates being lifted globally, cosmetics companies are enjoying boomlets that could continue to real comebacks following a long, dark winter.

The hope is that people will now start wearing more makeup.

LG Household & Health Care bounced back to the million-won ($830) range on Thursday after it plunged to 921,000 won on Jan. 10 from its 1.78 million-won peak in July last year. It closed at 1.04 million won on Friday.

The company's brands include The History of Whoo and O Hui.

Shares of Amorepacific, which markets Sulwhasoo products, broke 190,000 won after dipping to 144,000 won on Jan. 10. It is still down 37 percent from the recent peak in May last year. It closed at 190,000 won on Friday.

The rises follow eased government regulations against Covid-19 and its variants despite the surging cases.

In Korea, cafes, restaurants and bars will be able to stay open until 10 p.m. from Feb. 19, up from the previous 9 p.m.

Some states in the United States started eliminating mask mandates, including New York, which ended the indoor mask-or-vaccine system for businesses earlier this month, and Washington, where the city's indoor mask mandate will expire on March 21. The Dominican Republic ended all Covid-19 public health restrictions on Thursday, including mask mandates and vaccine checks in public spaces.

"The lifting of mask mandates is a crucial factor that will drive up cosmetics company earnings," said Jung Hea-jin, an analyst at Hyundai Motor Investment Securities. "Investment sentiment for the cosmetics sector recently improved on expectation of Korea's potential lifting of its mask mandate following in the footsteps of some countries, like the United States. But it will be in the second half of this year when cosmetics firms start to see their earnings improve from an increased floating population on the streets and Chinese tourists."

Sales of color cosmetics, in particular lip products and makeup bases, will jump once regulations on masks are relaxed, she added.

Expectations for color cosmetics sales gave a boost to cosmetics companies, like Clio Cosmetics, that specialize in color cosmetics.

Shares of Clio Cosmetics, well-known for its eyeliners and lipsticks, are up 55 percent from Jan. 27. It generates 78 percent of its sales from color cosmetics. The company reported a 1.5-billion-won net loss in the fourth quarter and a 4.6 billion won operating profit.

Amorepacific reported a 54.4-billion-won net loss in the fourth quarter compared to a 58.9 billion loss in the same quarter the previous year. LG Household & Health Care reported 136.4-billion-won net profit in the fourth quarter, down 4.3 percent on year.

"Authorities from key countries are signaling the easing of quarantine measures, and people are growing insensitive to Omicron," said Park Eun-jung, an analyst at Yuanta Securities Korea. "A time when suppressed demand for color cosmetics will explode is nearing."

Sales of color cosmetics at Olive Young, the country's largest health and beauty store franchise, rose 34 percent this month through Feb. 17 on year. Sales of lip makeup products were up 54 percent, makeup base products 36 percent and eye makeup products 30 percent.

BY JIN MIN-JI [jin.minji@joongang.co.kr]