[News Space=Reporter seungwon lee] It was revealed that ABC Mart (ABC Mart Korea), the number one shoe retailer in Korea, paid 43.8 billion won to its Japanese headquarters over the past six years in the name of royalties.

The largest shareholder of ABC Mart Korea is Japan-based ABC Mart.INC, which owns 99.96% of the shares. The remaining 0.04% is owned by Lee Ki-ho, CEO of ABC Mart Korea.

According to the six-year audit report of the Financial Supervisory Service's electronic disclosure system on the 20th, out of the profits earned from Korean consumers in Korea, 6.4 billion won to 8.2 billion won was consistently paid to the Japanese headquarters every year for the past six years as brand usage fees under the name of royalty.

In 2023, 7.6 billion won, in 2022, 7.3 billion won, in 2021, 6.4 billion won, in 2020, 8.1 billion won, and in 2018, 8.2 billion won were sent to the headquarters. 

In particular, the performance that had shown growth despite the negative impact of the boycott of Japanese products in 2019 suffered a severe recession in 2020 during the COVID-19 era. Operating profit in 2020 was 4.5 billion won, down 89% from the previous year (39 billion won). In addition, despite a net loss of 5 billion won, royalties of 6.2 billion won were paid.

ABC Mart has generated enormous sales of 400 billion to 600 billion won in Korea over the past six years. In particular, in 2023, it recorded 617.3 billion won, exceeding 600 billion won in sales for the first time. This is an 8.7% increase from 567.7 billion won the previous year. The cost of goods sold in 2023 was 324.7 billion won, which is 52.6% of total sales. In effect, it is a business that has about twice the sales profit compared to the cost.

In 2023, operating profit also increased by 9.5% from 55 billion won the previous year to 60.2 billion won. The operating profit ratio also reached 9.8%. For a shoe distribution store (channel) that is not a manufacturer, an operating profit ratio of 10% can be seen as a tremendous achievement.

Net profit for 2023 also increased 6% from the previous year's 48.8 billion won to 51.7 billion won. 

An official in the sporting goods industry pointed out, "The more Korean consumers purchase from ABC Mart, the more money flows out to ABC Mart, which is headquartered in Japan."

ABC Mart Korea was established on August 29, 2002 for the purpose of engaging in the wholesale and retail business of shoes. It is headquartered in Euljiro, Jung-gu, Seoul, and operates 327 stores in Korea, including the Myeongdong Central Store. The number of employees nationwide is approximately 1,700. 

Donations amounted to 840 million won, employee salaries amounted to 67.2 billion won, advertising and promotional expenses amounted to 8.4 billion won, and sales promotion expenses amounted to 2.8 billion won.

In particular, total debt, which was 49.5 billion won in 2022, increased to 51.5 billion won in 2023.

A shoe industry insider said, "ABC Mart's aggressive sales methods and good performance are already rumored in the industry," adding, "However, the fact that total debt exceeds 50 billion won does not seem like a good sign."

According to the audit report, there is also a pending lawsuit in which ABC Mart Korea is a defendant. ABC Mart Korea stated in the audit report, “Management cannot predict the outcome of the lawsuit at this time,” but “We believe that the impact of this lawsuit on the financial statements will not be significant.”

We requested an official inquiry and response from ABC Mart Korea regarding the article, but no response has been received.

On the other hand, not many people know that ABC Mart is a Japanese company. Since it is a franchise-operated offline shoe store that sells various domestic and international brands of shoes, people tend to spend without paying much attention to it.

ABC Mart Masahiro Miki, a manager, founded International Trading Company in 1985 and started out as an import and sales company for shoes, clothing, etc. In 1987, the name of International Trading Company was anglicized and changed to International Trading Corporation (ITC). After acquiring the rights to the 160-year-old British brand HAWKINS, the company was able to sell the products at half price, which led to a significant expansion of its business when it opened the first ABC Mart in Ueno, Tokyo in February 1990.

The ABC in ABC Mart is an acronym for Action, Begin, and Challenger. It means ‘a challenger who begins to take action.’ There is another interpretation. ABC stands for Ability (recruitment based on ability), Bargain (extraordinary discounts), and Customer (marketing tailored to customer needs), which are considered to be the success factors of ABC Mart.

The competition in the domestic editing shop industry is also becoming more intense. Companies such as Shoemaker, Folder, S-Market, Footmart, and Y Concept are aggressively expanding their territory in the domestic shoe distribution market. Nike and Adidas, the world's largest sports brands, are also strengthening their D2C (Direct to Consumer) sales, which sell products directly to consumers without going through an intermediate distribution stage.

A representative of a global shoe brand explained, "I understand that Nike, Adidas, and others have recently changed their sales methods to focus on offline again, after strengthening D2C where they communicate directly with customers," and "Due to distrust in online counterfeit products and anxiety about e-commerce such as the Timepup incident, the trend is changing to one where people rely more on franchise select stores such as ABC Mart where they can compare, see, and experience various brands offline before making a purchase."

Professor Seo Kyung-deok expressed his opinion, saying, "It is right to boycott Japanese war criminal companies or companies that support Japanese right-wing activities," but also, "It is desirable to move in the direction of respecting consumers' right to choose."