Starbucks Korea swung to an operating loss in the second quarter as sales weakened following backlash over a marketing campaign linked to South Korea’s 1980 Gwangju pro-democracy uprising and the suspension of its flagship summer promotion.
SCK Company, the operator of Starbucks Korea, reported an operating loss of 18.4 billion won (US$13.4 million) for the quarter, compared with an operating profit of 40.3 billion won a year earlier and 29.3 billion won in the preceding quarter.
The company’s parent, E-Mart, said in its earnings announcement that SCK did not hold its usual summer promotional campaign in June.
The setback followed controversy in May when Starbucks Korea halted and apologised for its “Tank Day” tumbler campaign on May 18 after it drew criticism for evoking the Gwangju uprising, when government forces violently suppressed pro-democracy protesters.
The backlash prompted Shinsegae Group, which owns E-Mart, to dismiss the head of Starbucks Korea. The group subsequently said sales had fallen “very significantly” and introduced historical awareness and social sensitivity training for employees.
E-Mart did not directly attribute SCK’s quarterly decline to the controversy or subsequent boycott calls.
The Gwangju uprising remains a highly sensitive episode in South Korean history, with May 18 commemorated annually as a national day of remembrance for the pro-democracy movement.
Reuters
