[비즈한국] CJ001040 Olive Young is accelerating its foray into the U.S. market. Despite having past experience in China and the U.S. that ultimately led to withdrawal, the company is attempting a comeback, leveraging the recent surge in K-Beauty's popularity. Industry experts interpret this U.S. entry as holding significance beyond mere overseas expansion, with some suggesting a strategic move aimed at a future merger with CJ following an enhancement in corporate value.
A Second Attempt at the U.S. Market in 8 Years, Fueled by K-Beauty
CJ Olive Young will open its first store in Pasadena, California, this May, marking the start of its full-scale offline operations in the U.S. Starting with this flagship, the goal is to expand to a total of four stores, with additional locations planned for major commercial areas such as Westfield Century City and Del Amo Fashion Center in Torrance.
Olive Young's plans for global expansion began in 2010. With the opening of the Myeongdong flagship store in Seoul, the company formalized its overseas ambitions, presenting a strategy to use the store as a testbed to gauge foreign demand and as a forward base for global entry.
However, the journey that followed was not smooth. After entering China in 2013 and expanding to 10 stores, the business faltered due to deteriorating external environments, such as the THAAD fallout, leading to a complete withdrawal of direct-operated stores in 2020. In the U.S., the company also attempted entry in 2018 by establishing a New York subsidiary, but it failed to yield meaningful results and withdrew without successfully scaling its store count.
The reasoning behind Olive Young's decision to re-enter the U.S. appears to be rooted in confidence regarding K-Beauty. Amid the global K-Beauty craze, Olive Young has established itself as an "essential shopping destination" for foreign tourists, and it appears the company has gained the conviction that it can prove its competitiveness in overseas markets as well. According to industry data, Olive Young's sales from foreign customers last year are estimated to have exceeded 1.1 trillion won, with foreign transactions reportedly accounting for approximately 28% of total offline sales.
However, CJ Olive Young maintains that its past U.S. attempts should be distinguished from its current business. A CJ Olive Young representative explained, "The 2018 establishment of the New York subsidiary was led by CJ OliveNetworks, and that entity was transferred to OliveNetworks during the subsequent spin-off process," adding, "This store opening is the first entry into the U.S. market under the Olive Young entity."
Stock Option Cancellations, U.S. Subsidiary Establishment, and Merger Rumors
The U.S. market entry has also sparked interpretations that it is a strategic move tied to a restructuring of governance. In February of last year, Olive Young canceled all stock options previously granted to its employees. Typically, when a company pursuing an Initial Public Offering (IPO) cancels stock options, it is viewed as a sign that the momentum for listing has weakened.
In conjunction with this, a U.S. subsidiary was established. Olive Young set up a local entity in Los Angeles in February 2025 to lay the groundwork for market entry. Consequently, there is speculation in the industry that a mid-to-long-term strategy is underway to boost corporate value through global expansion before pursuing a merger with CJ.
Olive Young had pursued an IPO in 2022, but postponed it indefinitely due to deteriorating market conditions. While the possibility of a listing has been discussed again following a steady improvement in performance, the government has strengthened regulations regarding the duplicate listing of large conglomerate affiliates, making the conditions for an IPO much more challenging. Considering this market environment, analysts suggest that Olive Young is likely to prioritize a reorganization of governance through a merger rather than an IPO. Financial circles even suggest that such processes could begin in earnest around next year.
The merger is drawing attention because it could coincide with the reshuffling of control by the founding family. Currently, CJ is the largest shareholder of Olive Young with a 51.15% stake, while CJ Group Leader Lee Sun-ho (the eldest son of CJ Group Chairman Lee Jay-hyun) holds 11.04%, and eldest daughter Lee Kyeong-hoo, a management leader at CJ ENM035760, holds 4.21%. If a merger takes place and shares are exchanged, Group Leader Lee could secure a stake in CJ without additional cash investment. This is why observers suggest the merger could be advantageous for consolidating the founding family's control.
Treasury shares are also cited as a factor that could impact changes in governance. If Olive Young retires its roughly 22.6% treasury stake, the percentage of shares held by existing shareholders would naturally increase. Consequently, it is projected that Group Leader Lee's stake could rise from the current 11.04% to the 14% range.
The key factor remains performance in the U.S. market. Industry experts believe that if Olive Young achieves meaningful results globally, beyond its success in South Korea, there is a high likelihood of a corporate revaluation. As corporate value increases, the size of the CJ stake that Olive Young shareholders would receive upon merger would also grow. Ultimately, analysts argue that global success and an increase in corporate value could lead to securing a larger stake in the holding company, thereby strengthening the control of Group Leader Lee.
However, opinions are divided on the prospects for success in the U.S. market. While some believe that Olive Young will be able to secure competitiveness in the U.S. market thanks to the popularity of K-Beauty, others predict that it will not be easy to establish a firm foothold in the short term due to competition with local players such as Sephora and Ulta Beauty.
A CJ Olive Young representative stated, "We plan to build our U.S. stores as K-Beauty showcases that integrate our merchandising curation capabilities and store operation know-how," adding, "We are currently in discussions with some 400 K-Beauty brands as well as global brands, and we plan to add a wide variety of beauty and wellness products in the future." Regarding the merger, they drew a line, stating, "Nothing specific has been reviewed to date.".