[Edaily Reporter SHIN MIN JOON ] Youngone Corporation(111770)(YoungoneHoldings) has been drawing attention for recording sustained operating profits since its debut on the KOSPI market in 2009. With 68 consecutive quarters of operating profit, YoungoneHoldings is maintaining the longest streak of profitability in the domestic fashion industry.

The key to this success is said to be the company’s strategy of securing brands with high growth potential—such as The North Face, Patagonia, Lululemon, and Arc’teryx—as clients in line with shifting consumer trends. Recently, the company has even attracted Swiss-based On Holdings, which has grown amid the running craze, as a new client in its core original equipment manufacturing (OEM) division, and is expected to continue its streak of profitability in the second half of this year.

According to the retail industry on the 15th, Youngone Corporation is set to announce its third-quarter earnings this year. Third-quarter revenue and operating profit are projected (based on FnGuide Inc. estimates) to reach 1.3496 trillion won and 211.7 billion won, respectively. This represents year-over-year increases of 12.0% and 16.8%, respectively. If Youngone Corporation posts a profit in the third quarter of this year, it will extend its streak of consecutive profitable quarters to 69.

Youngone Corporation continued its trend of improved performance in the first half of this year as well. Cumulative revenue for the first half of the year reached 2.464 trillion won, while operating profit stood at 353.5 billion won. These figures represent year-over-year increases of 12.8% and 19.8%, respectively.

Since its initial public offering in 2009, Youngone Corporation has not posted an operating loss in a single quarter. According to a recent analysis by CEO SCO, a corporate data research institute, of the individual financial statements of 351 companies—out of the top 500 domestic companies by revenue—that submitted semi-annual reports, Youngone Corporation posted an operating profit for the 68th consecutive quarter as of the first half of this year. This marks the longest streak of profitability in the domestic fashion industry.

The company’s long-term profitability is underpinned by its early entry into global brands with high growth potential and its established manufacturing competitiveness. Youngone Corporation focuses on its OEM business, producing apparel for approximately 40 global brands, including △The North Face, △Arc’teryx, △Patagonia, and △Lululemon. Youngone Corporation has built its competitiveness by securing a diverse client base to respond to shifts in demand and by producing functional apparel that requires advanced technical expertise. The switching costs and burdens clients face when changing manufacturers are also cited as one of Youngone Corporation’s strengths.

In particular, Arc’teryx—with which the company has done business since 2011—has emerged as a key client, driving its growth. Arc’teryx became Youngone Corporation’s largest client in the first quarter of this year. Youngone Corporation’s sales growth rate for Arc’teryx (according to NH INVESTMENT & SECURITIES) reached 68% in the first quarter and 58% in the second quarter of this year.

Recently, the company secured On Holdings—operator of the Swiss running brand On—as a new client. On Holdings, which grew primarily through running shoes, is expanding its business into apparel and other areas. Last year, sales in the apparel segment reached 169.9 million Swiss francs (approximately 274 billion won), a 68% increase from the previous year. This is why there are expectations that On Holdings’ expansion into the apparel business could become a new growth driver for Youngone Corporation.

Thanks to increased orders from existing clients and the acquisition of new ones, the outlook for the second half of this year is also bright. OEM orders from major clients—including The North Face, Arc’teryx, Patagonia, and Lululemon—are expected to continue rising in the second half, driving improved performance.

A fashion industry insider stated, “Since Vice Chairman Seong Rae-eun was promoted to vice chairman in 2022, marking the full-scale transition to second-generation leadership, the company has maintained stable business performance, driven by the growth of new key clients such as Arc’teryx and Lululemon.” The insider added, “It is also positive that the company is accelerating its commitment to responsible management, as evidenced by its recent decision to repurchase 50 billion won worth of its own shares.”