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Luxury goods

Korea’s Simone: Rise from replica handbag maker to luxury brand

With its Kospi IPO next month, Simon plans to further expand facilities to solidify its market leadership

By Sep 09, 2021 (Gmt+09:00)

Simone Chairman Park Eun-kwan
Simone Chairman Park Eun-kwan

UIWANG, Gyeonggi Province – Simone Acc. Collection Ltd., a South Korean luxury handbag maker, stresses one interesting number to its clients whenever occasions occur: 6,500.

Founder and Chairman Park Eun-kwan says it is the combined years of work experience of its master craftsmen that have made Simone what it is today.

Some of the masters have decades of work experience individually, creating luxury handbags through elaborate leatherwork.

“The power of Simone comes from the fingertips of our 366 handbag masters,” says Park, who first started Simone as a small leatherwork enterprise in 1987.

Headquartered in Uiwang, a city southwest of Seoul, Simone is Asia’s first original development manufacturer (ODM) to have tapped into the luxury handbag manufacturing market.

The company now holds a comfortable lead in the global market, with its ODM business controlling about 10% of the luxury handbag segment and 30% of the US market.

Simone’s annual handbag and wallet production capacity at its plants in Korea, Vietnam and Indonesia is 30 million units, the world’s largest. The company has produced about 400 million handbags since its launch.

luxury handbag made by Simone
luxury handbag made by Simone

DKNY, MICHAEL KORS, MARC JACOBS

In addition to US-based luxury brand Donna Karan New York (DKNY), the Korean company boasts a strong client portfolio of around 20 luxury brands globally, including Michael Kors, Marc Jacobs and Coach.

“We own more than 220,000 handbag designs that we have developed. We even propose our designs to our major clients,” said Park.

He said what’s important in business dealings with its clients is to maintain mutual trust over the long-term.

Simon’s partnerships with DKNY, Marc Jacobs and Michael Kors last 33 years, 20 years and 18 years, respectively, according to Park.

The company has also been expanding its business by releasing 0914, a brand of handbags designed, manufactured and marketed by Simone.

The company's profit largely comes from its ODM portion, which accounts for 70% of its total revenue.

Its 2020 sales declined by almost 40% to 621.8 billion won ($531 million) from a year earlier, battered by the pandemic-induced economic slowdown. Its operating profit dwindled by almost two-thirds to 46.7 billion won.

Prior to the pandemic, the company had posted an operating profit margin of 16.3% on average over a five-year period, sharply higher than the fashion industry’s average margin of 4.7%.

Chairman Park said he expects consumer demand for luxury handbags to rise, boosting its earnings, in coming years with the global economy gradually recovering from the pandemic.

luxury handbag maker Simone
luxury handbag maker Simone

IPO IN OCTOBER

Simon aims to list its shares on the main Kospi market in October to raise capital for business expansion.

The company has said it plans to sell 8.37 million shares at a price between 39,200 won and 47,900 won to raise up to 401 billion won.

Its bookbuilding with institutional investors is set for Sept. 24-27, while the subscription from retail investors is scheduled for Sept. 29-30. Samsung Securities, Mire Asset Securities and Korea Investment & Securities Co. are managing its IPO.

In 2015, US private equity firm Blackstone invested $300 million to acquire a 30% stake in Simone, in which its Chairman Park and his wife control 61.2% combined.

Part of the proceeds from the initial share sale will be used to expand its Indonesian facilities.

Simone’s total handbag production capacity will rise to 35 million units a year by 2025 through its global facility expansion efforts, he said.

Write to Jin-Won Kim at Jin1@hankyung.com

In-Soo Nam edited this article.

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