**Coupang’s Operating Profit Margin at 1.38%, Lowest Tier in Retail… Naver at 18%**
Coupang Inc., the parent company of Coupang, experienced a slowdown in sales and a decline in operating profit margin in the fourth quarter of last year due to a personal information leak incident. This underperformance has widened the profitability gap with other retail competitors. It is seen that other companies have benefited as Coupang slowed down.
According to industry sources on the 27th, Coupang Inc.’s operating profit in the fourth quarter of last year was only 11.5 billion won (8 million dollars), marking a 97% drop compared to the same period the previous year. The operating profit margin plummeted to 0.09%, and the net loss was 37.4 billion won (26 million dollars).
During the same period, revenue stood at 12.8 trillion won (8.835 billion dollars), a 5% decrease compared to the previous third quarter. Coupang’s CFO, Gaurav Anand, stated, “The information leak incident in December slowed revenue growth and reduced active customers,” adding that “Wow membership numbers also slightly decreased compared to the previous year, and Coupang Eats was also impacted in terms of growth pace.”
Coupang’s operating profit margin has consistently declined for three years, from 1.93% (617 billion won) in 2023, 1.46% (602.3 billion won) in 2024, to 1.38% this time.
In contrast, Naver recorded an operating profit of 610.6 billion won in the fourth quarter of last year, matching Coupang’s annual performance, with a 12.7% increase compared to the previous year. Based on this, Naver achieved an annual operating profit of 2.2081 trillion won last year.
Naver’s operating profit margin is 18.35%, about 13 times that of Coupang. In terms of net income after excluding taxes and expenses, Naver recorded 1.8203 trillion won, approximately six times more than Coupang’s 303 billion won.
However, there are criticisms that Naver’s earnings include combined profits from various business divisions such as search platforms, commerce, fintech, cloud, and content, making direct comparisons difficult.
Naver’s commerce revenue last year was 3.6884 trillion won, with commerce accounting for 36.2% of total revenue in the fourth quarter, demonstrating that distribution has developed into a core business. Fourth-quarter commerce revenue grew 36% compared to the same period the previous year.
Traditional retail giants such as Lotte Shopping, Shinsegae, and Emart also widened their gap with Coupang. Emart’s operating profit last year surged by 584.7% to 322.5 billion won, while Lotte Shopping’s increased by 15.6% to 547 billion won. The industry, which had been struggling due to Coupang, succeeded in regaining profitability.
In terms of last year’s operating profit margin, Coupang was also outpaced by companies like Shinsegae (4%), Hyundai Department Store (3.83%), and Lotte Shopping (3.98%), as well as BGF and GS Retail, which recorded mid-to-high 2% range, ranking among the lowest alongside Emart (1.11%).
This performance indicates that consumers have left Coupang due to the personal information leak incident and switched to other distribution channels like Naver.
According to retail analysis service WiseApp, Naver Plus Store’s monthly active users (MAU) surged to over 7 million, compared to 6th place among comprehensive mall apps (6.44 million) in December last year. Meanwhile, Coupang’s MAU dropped by 1.09 million (3.2%) to 33.18 million from the previous month.
Additionally, it seems the situation, where Coupang had to “halt” all year-end marketing like Christmas sales due to government investigations and public hearings in December, had an impact.
Indeed, in Coupang’s logistics sites, over 5,000 employees applied for unpaid leave from December last year to the second week of January this year due to reduced order volumes. On the ground, there are reactions stating that key marketing like Rocket Delivery and Rocket Fresh was suspended as the government’s comprehensive investigation intensified.
The gross profit increase rate, an indicator of the profitability of product commerce like Rocket Delivery and Rocket Fresh, was only 5% in the fourth quarter last year. Considering the 24% growth rate in the previous third quarter, profitability significantly deteriorated.
Analysts suggest that the long-term prospects are concerning as the investigation and legal disputes regarding fines related to the information leak incident could further lower Coupang’s operating profit and profit margins in the future.
CFO Anand projected the first-quarter sales growth rate to be 5-10%. If realized, this would be much lower than the growth rate of the fourth quarter last year, marking it as the first time since Coupang’s listing on the U.S. stock exchange to record a growth rate below 10%.
An industry insider commented, “In a situation where the direct purchase business model significantly suffers from large-scale logistics center, workforce, and delivery investments, the government’s intensive investigation and announcement of information leakage fines are anticipated,” suggesting that “without strengthening profitability resilience, Coupang may face difficulties in mid-to-long-term competition with Naver and domestic retailers.”