Kurly achieves first quarterly profit in 9 years

[Courtesy of Kurly Inc.]

Kurly Inc., South Korea’s fresh food delivery platform, has achieved its first quarterly profit in the first quarter of this year, a performance that comes amid heightened competition posed by Chinese e-commerce giants like AliExpress and Temu.

Kurly’s fresh food business remains untapped by Chinese competitors, insiders say.

Kurly announced Tuesday that it posted record-high sales of 538.1 billion won ($394.2 million) in the first quarter, up 6 percent from the same period a year ago.

The company’s operating profit stood at 525.7 million won in the January-March period, the first profit since its inception in 2015.

Although it failed to achieve profitability on a consolidated basis, Kurly significantly reduced its operating losses from over 30.5 billion won in the first quarter of last year to under 200 million won in the first quarter of this year.

Despite challenges faced by various online shopping malls due to the surge of Chinese direct purchasing apps, Kurly’s overall gross merchandise volume (GMV) for the first quarter reached 736.2 billion won, up 13 percent from a year earlier.

Kurly’s focus on fresh food, an area where Chinese e-commerce has not yet entered, has highlighted its competitiveness.

Kurly has also improved its profit structure by diversifying revenue sources and reducing transportation costs and payment fees since last year.

Costs including transportation and payment fees fell by 6 percent to 63.8 billion won in the first quarter of this year compared to the same period last year. Additionally, the proportion of transportation costs and others in total sales decreased by 1.5 percentage points to 11.9 percent over the past year.

Logistics efficiency improvements from the openings of logistics centers in Changwon and Pyeongtaek last year have contributed to the company’s performance.

The Songpa logistics center, whose contract period expired, was withdrawn, led to a reduction in inefficient cost expenditures.

In addition to fresh food, Kurly has diversified its revenue through fee-based 3P (seller delivery), Kurly Membership, and logistics outsourcing businesses.

In particular, 3P sales grew fivefold in the first quarter compared to the same period last year, while sales of Beauty Kurly also grew by 34 percent.

Kurly plans to focus on securing new growth drivers, leveraging this first-quarter profit as a starting point. Key areas of investment for Kurly include expanding customer shopping convenience, enhancing activity, and continuing to pursue new business development and expansion of early morning delivery areas.

The financial investment industry is closely watching whether Kurly will reattempt its initial public offering (IPO). Although Kurly passed the Korea Exchange’s review in 2022, it decided to postpone its IPO earlier last year.

The company said there are no specific details confirmed regarding the recently mentioned IPO in the market, but it plans to work closely with underwriters to reinitiate it at a favorable timing.