[News Space=Reporter heesun kim] J Collection (CEO Jeong Tae-ho), which distributes Smeg products with a 70-year tradition established in the Guastalla Emilia region of Italy, recorded deficits in both operating profit and net profit last year. In addition, following two consecutive years of operating losses, there is analysis that a red light has been turned on for its financial soundness, as it is expected to face short-term financial pressures such as a high debt ratio, lack of liquidity, and debt repayment. 

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 3rd, J Collection's sales last year decreased by about 14% from the previous year (KRW 18.1 billion) to KRW 15.5 billion. The decrease in sales was due to sluggish product sales.

The operating profit and net profit also recorded losses for two consecutive years. Last year, the operating loss was 299.36 million won, which was an improvement from the previous year's operating loss (924.65 million won), but it still continued to be in the red. The net loss for the period was 462.37 million won, which was a smaller loss than the previous year's net loss (1.4167 billion won), but it still recorded a loss.

Total liabilities were 7.6 billion won, and total capital was 5.3 billion won. Therefore, the debt ratio was 141.6%, which is almost the same as the previous year (142.7%). In addition, current liabilities were 6.8 billion won, current assets were 11.1 billion won, and non-current assets were 1.9 billion won. 

In particular, it issued 1.5 billion won worth of corporate bonds (unsecured private placement bonds with bearer rights, issuance yield 4.188%) in May 2022, and the maturity date is May 22, 2025.  

Inventory assets were found to have increased by 15% from the previous year's 7 billion won to 8.1 billion won, showing that there are problems with inventory management along with a decrease in sales.

Selling and administrative expenses amounted to 7.3 billion won, down about 15% from the previous year. Of this, 2.1 billion won was spent on salaries, 1.2 billion won on rent, 1.09 billion won on commissions, and 7.9 billion won on advertising and publicity. Shareholder and executive salaries were not separately stated in the audit report.

An industry financial expert assessed, "A fairly high number of commissions were used compared to the size of the company," and "It appears to be a cost related to various incentives to promote sales, but it is necessary to review whether these costs actually led to an increase in sales."

The downfall of Smeg is evidence that although it was a style icon that was called the 'Gangnam refrigerator' and 'celebrity home essential' and recorded monthly sales of over 100 million won at its Galleria Department Store pop-up store, if it fails to keep up with trends and consumer expectations, it will decline.

Smeg's high price, coupled with frequent breakdowns, poor performance, durability issues (plastic parts overheating, paint peeling, etc.), poor accessibility to after-sales service, and high repair costs (delayed repairs even during the warranty period, no support after the warranty period) appear to have led to customer dissatisfaction, resulting in sluggish sales.

A domestic consumer criticized, "The gap between Korea's Samsung and LG in energy efficiency and smart features is too big. Smeg refrigerators scored the lowest in temperature stability evaluations, while competitor products showed over 80% efficiency." He added, "Compared to other brands, they have smaller capacities and are expensive, and are remembered as the brand with the 'worst cost-effectiveness.'"

In fact, it has been ranked as the ‘worst fridge’ in consumer reviews and independent testing from sites such as Reddit, CHOICE and ConsumerNZ due to serious quality issues and poor performance. In particular, the Smeg FAB**** model scored 22%, the lowest score in CHOICE history.

It also received harsh reviews, such as "the internal temperature fluctuates by up to 5 to 10°C, which accelerates food spoilage and threatens safety", "the freezer temperature drops to -28.9°C when the outside temperature is 10°C", "the cooling function does not work properly, causing food to spoil", "the refrigerator door seal cracks and internal plastic parts break", "low energy efficiency, high long-term maintenance costs", and "it has style, but the performance is at the level of the 1950s."

According to Reddit, Smeg toasters have been reported to break down after an average of 14 months, which is significantly shorter than the average lifespan of most small appliances (6-10 years). In the Choice Test, it was also rated as "Smeg small appliances have no special merits other than their design, and they lack durability."

Korean consumers gave the following evaluations: "Home appliances that are too expensive for interior use", "Performance that is drastically lower than that of Samsung Electronics and LG Electronics", "Electronic products that are only enjoyed with the eyes because of their good design", and "Quality that is particularly low among European home appliance brands."

A financial expert in the distribution industry said, "J Collection has reduced its losses despite the difficulties of declining sales and continued deficits," adding, "However, high debt ratio and liquidity issues remain ongoing risks, and increasing inventory assets and repaying corporate debt appear to be important tasks."

An official from the home appliance industry in the distribution industry pointed out, "Competitive global home appliance companies such as Dyson, Balmuda, Shark Ninja, Delonghi, Electrolux, Braun, and Bersuni Korea (formerly Philips Home Appliances Korea) are in a fierce battle with Korean consumers who demand practical performance and reliability beyond beautiful design." He added, "If Smeg fails to meet the needs of Korean consumers, the decline in its market share is likely to continue."