[비즈한국] The pet business, identified by Daekyo019680 Group as a future growth driver, is struggling to gain traction. Last year, Daekyo acquired Howlpot, which was already in a deficit, to enter the pet care market, but there has been no turnaround in performance since the acquisition. With the senior care sector—another new business venture—also continuing to record losses, some suggest that these new projects are delaying Daekyo's overall earnings recovery.
Daekyo Enters Pet Market, But Results Remain Minimal After One Year
It has been one year since the education firm Daekyo acquired the pet specialty company 'Howlpot.' In November of last year, Daekyo made the acquisition official, announcing a strategy to make the pet business a new pillar of growth. Prior to this, Daekyo invested approximately 2 billion won in February 2023 to secure a 31.5% stake in Howlpot, and in October of last year, it purchased additional shares to increase its stake to 59.83%, becoming the largest shareholder.
Howlpot is a premium pet company founded in 2015 by a former home appliance designer from Samsung Electronics005930. Beyond selling its own designer goods such as pet houses, beds, and dishes, the company also operates 'Care Clubs,' which combine services like pet hotels, daycare, and grooming. It currently holds four locations in Seocho, Hannam, Bundang-Seohyeon, and Wirye. Last February, the company opened the 'Howlpot Edu Center,' a customized training space for dogs, at its Hannam branch.
Daekyo's move to acquire Howlpot was aimed at securing new growth engines in the rapidly expanding pet market. However, market sentiment at the time of the acquisition was not particularly optimistic because Howlpot's performance had been lackluster. Howlpot's cumulative revenue for the third quarter of 2024 stood at just 1.5 billion won, while it recorded a cumulative loss of 1.4 billion won for the same period.
Nevertheless, Daekyo emphasized the necessity of entering the pet care market and chose Howlpot as a core element of its future business portfolio. A Daekyo official explained, "Due to our high reliance on our core education business, we needed to secure new businesses and future growth drivers. The acquisition of Howlpot was a decision made to secure these new ventures."
However, Howlpot has failed to emerge from its deficit even after the acquisition. Following a loss of 392 million won in the fourth quarter of last year, Howlpot recorded losses of 295 million won and 302 million won in the first and second quarters of this year, respectively. The cumulative loss through the third quarter stands at approximately 900 million won. A Daekyo official explained, "When considering various factors such as legacy marketing costs reflected during the acquisition process, we are still in the stabilization phase," adding, "It will take more time to improve profitability."
As profitability improvements are delayed, the business expansion plans initially proposed during the acquisition also appear to be losing speed. Last year, when Daekyo acquired Howlpot, it hinted at entering the 'academy' business to train pet care professionals and the 'pet sitter' business. However, these execution plans have yet to materialize. The aforementioned official stated, "While we continue to strengthen the services Howlpot previously offered, we plan to review and proceed with new businesses in the future. Concrete execution steps have not been determined yet."
Shift to Deficit in Q3: Are New Businesses Weighing Them Down?
Daekyo is considered one of the jewels of the education industry. It maintained steady growth after introducing the 'Nunnoppi' workbook in 1991 and maintained a streak of profitability since 1994. The sense of crisis for Daekyo began in 2020. In 2020, revenue fell 17.7% from the previous year (761.6 billion won) to 627 billion won, and the company recorded an operating loss of 28 billion won, marking its first deficit in 25 years.
This poor performance has continued since. While revenue rebounded slightly in 2021, the deficit persisted. The operating loss, which was 28.3 billion won in 2021, jumped to 50 billion won in 2022 and recorded 27.7 billion won in 2023. Although the loss was reduced to 1.6 billion won last year, the company has yet to exit its deficit state.
There were signs of performance improvement in the first half of this year. In the first quarter of 2025, revenue was 165.6 billion won, and the company successfully turned a profit with an operating profit of 900 million won. It maintained a profitable flow in the second quarter, but recorded a loss of 30 million won in the third quarter, turning back into a deficit. Daekyo explained, "Increased costs from expanding the senior business and strengthening the premium lineup for infants within the education business had an impact."
The industry points to the sharp decline in the school-age population as the primary cause of Daekyo's deteriorating performance. Analysts suggest that while the company built its core business around educational services for children and adolescents, the rapid decline in the school-age population since the late 2010s and the shrinking education market have taken their toll.
The delayed results of new businesses are also seen as a factor exacerbating the poor performance. Daekyo has been driving its new business strategy since CEO Kang Ho-jun, a second-generation owner, took office in March 2021. CEO Kang proposed edutech, senior care, and pet care as core strategic pillars. In his first year, the company focused on developing AI-based learning content and digital transformation; in 2022, it launched the senior care brand 'Daekyo Nuife' to expand into the elderly market. Last year, it expanded into life care by acquiring the pet specialty company Howlpot.
However, the results of the new businesses Daekyo has invested in are not yet clear. Senior care, which accounts for the largest portion of the new businesses, is growing in size but has yet to secure profitability. While Daekyo's senior business revenue grew from 900 million won in 2022 to 11.9 billion won in 2024, operating losses widened from 2.6 billion won to 6 billion won during the same period.
A Daekyo official said, "The senior business is in a phase where revenue is steadily growing, and investment costs are continuously being poured in during the business expansion process. Internally, we judge the current situation as manageable," adding, "We expect to see some results once the core business and new businesses stabilize as planned."