Kurly Records First Monthly Profit Since 2015, Driven by Structural Improvements
Korean retail tech unicorn company Kurly recorded a positive Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) in December last year, marking its first monthly profit since its establishment in January 2015, a milestone achieved after nine years.
Kurly’s monthly EBITDA profit is not a temporary effect but the result of thoroughly planned structural improvements, the company explains. In December last year, the EBITDA profit increased by about 10 billion won compared to December 2022, indicating evenly improved related indicators, such as sales and costs.
The most significant improvement was seen in direct logistics costs. With the increased productivity of the newly opened logistics centers in Changwon and Pyeongtaek in the first half of last year, and the closure of the existing Songpa logistics center, the company achieved stabilization and optimization of logistics operations. This led to a significant reduction in order processing costs. Concurrently, they secured competitive delivery costs and maximized efficiency by improving delivery concentration, which lowered last-mile delivery expenses. The increased use of the reusable ‘Kurly Purple Box‘ packaging reduced paper packaging usage, and internalizing dry ice production also decreased related costs.
Marketing expenses were significantly reduced as well. By selecting cost-effective channels, the company focused on marketing and promotions, thereby enhancing efficiency. The introduction of the paid membership ‘Kurly Members‘ resulted in customer lock-in effects, which increased repurchase rates and helped to reduce marketing expenses. Fixed costs, such as labor, IT system maintenance, and other operating expenses, were slightly reduced compared to December 2022.
Gross sales profit also saw significant improvement. Efforts to reduce the cost of goods sold contributed to the increase in EBITDA. Additionally, growth in sales from new ventures, such as Beauty Kurly, commission-based 3P, Kurly Card, and fulfillment services, aided in improving profitability.
“Monthly EBITDA profit signifies that Kurly has begun earning money through its business activities,” states Kurly. Indeed, Kurly’s cash assets at the end of last year were approximately 1,400 billion KRW, an increase of about 120 billion KRW from 1,280 billion KRW at the end of the third quarter. This structure allows for investment in and operation of new businesses through internally generated cash.
Kurly’s cumulative operating loss until the third quarter of last year decreased by 35.5% compared to the same period in 2022. The company successfully reduced operating losses despite temporary additional expenses incurred due to the opening of new logistics centers in Changwon and Pyeongtaek and the closure of existing centers until stabilization.
Additionally, Kurly reported that in December last year, the total transaction amount grew by 5% compared to the same month in 2022, achieving both sales growth and profitability improvement. Jonghoon Kim, Chief Financial Officer of Kurly, commented, “Kurly’s monthly EBITDA profit is a valuable achievement made through comprehensive structural improvements and efficiencies. With December’s profit as a catalyst, we plan to accelerate further performance improvements this year.”
[Korean Commerce Startup News]
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