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Luxury goods' sales show weak growth amid sluggish economy

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(Globalpost/GlobalPost)

SEOUL, July 4 (Yonhap) -- Foreign luxury brands in South Korea, one of their biggest Asian markets, marked up sluggish sales growth in fiscal 2013, data showed Friday, as more buyers opted to make direct purchases from abroad to save costs.

Burberry Korea said in a regulatory filing that its sales gained 4.5 percent on-year to 239.3 billion won (US$237.24 million) in fiscal 2013, which ended on March 31.

Prada Korea Ltd., a unit of Prada SpA, recorded 351 billion won in sales in the period, up 9.9 percent from a year earlier, while that of Christian Dior Couture Korea Ltd. advanced 5.6 percent to 31.1 billion won. The two firms close their books on Jan. 31 and Dec. 31, respectively.

Sales of Ferragamo Korea Ltd. jumped 13.8 percent on-year in fiscal 2013, which ended on Dec. 31, but its net profit plunged 43.5 percent to 8.08 billion won due mainly to a rise in sales management costs.

Other designer brands logged losses, with Gucci Group Korea Ltd. recording 252.5 billion won in sales, down 5.2 percent from the year before. The company closes its books on Dec. 31.

Fendi Korea's sales ran below 30 billion won for the first time in three years, with its net profit plummeting 76.88 percent to 269.34 million won.

Market watchers say more consumers are making direct purchases from overseas websites, which is cheaper than buying local imports because it reduces retail costs. A consumer report said a foreign lipstick brand, for instance, is priced at nearly 15 times the original import price by the time it reaches department stores.

The trend gained support from the government, which in April simplified customs clearance procedures for such direct purchases to shorten delivery time. South Koreans bought $478.9 million worth of products through overseas shopping malls during the January-April period this year, up 56 percent from last year.

South Korea's market for foreign luxury brands topped 5 trillion won in 2012, according to the Korea Chamber of Commerce and Industry.

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