Starbucks Korea posts Q2 operating loss amid marketing backlash

Key facts

• Starbucks Korea's operator, SCK Company, reported an operating loss of 18.4 billion won ($13.4 million) in the second quarter.
• This marks a significant drop from an operating profit of 40.3 billion won in the second quarter of the previous year.
• The company did not conduct its typical June summer promotional campaign.
• A marketing campaign in May, referencing "Tank Day," was halted and apologized for after public criticism.
• The parent company, Shinsegae Group, dismissed the head of Starbucks Korea.
• Sales reportedly declined "very significantly" after the controversy.

Starbucks Korea's operator, SCK Company, has reported an operating loss of 18.4 billion won ($13.4 million) for the second quarter, a stark contrast to the 40.3 billion won profit recorded in the same period last year and the 29.3 billion won profit from the preceding quarter.

The decline in earnings follows significant backlash over a marketing campaign that evoked a brutal 1980 military crackdown on pro-democracy protesters, leading to the campaign's suspension and an apology. The company also did not hold its usual flagship summer promotional campaign in June.

In response to the controversy, the parent company, Shinsegae Group, dismissed the head of Starbucks Korea. E-Mart, SCK's parent, stated that sales had dropped "very significantly" and implemented historical awareness and social sensitivity training for staff. While E-Mart did not directly attribute the quarterly decline to the controversy or subsequent boycott calls, the events closely preceded the reported financial downturn.