The financial statements for 2022 of Food, Drug

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The financial statements for 2022 of Food, Drug and Rural Affairs Co., Ltd., known for its "Lundrigo" service, were disclosed in an audit report.

Sales in 2022 amounted to 33.3 billion won, an increase of 2.56 times from 13 billion won in 21, and Laundrie service sales, a non-face-to-face laundry service, contributed most of the increase to 30.3 billion won.

As costs more than doubled, operating losses increased significantly from 13.6 billion won to 29.5 billion won in losses.

What you should pay attention to here is the cost of service sales. The cost of sales of 30.3 billion won is 28.5 billion won, with a gross profit margin of only 5%. This is one-third of what it was in 2021, when it was 15%, and if this trend continues, it can be said that the possibility of making a profit from the 'Lundrigo' service itself is slim.

Most of the cost of sales was also taken up by employees' salaries, which was 14.3 billion won, up three times from 4.8 billion won in 21. One of the logic behind turning the Rundrigo service into a surplus was that it was possible to reduce the unit cost of the laundry business by achieving an "economy of scale," but rather, the ratio of labor costs to sales was higher. I think my hypothesis that it will be difficult to achieve an "economy of scale" in the case of retail laundry services seems to be somewhat correct.

It was speculated that it would not have been easy to secure liquidity because the net loss for the current period reached 30 billion won, but it also seems to have secured liquidity by attracting 49 billion won in additional investment in November 2022.

According to the financial statements, the total capital is KRW 39.9 billion, and if the current burn rate is maintained, additional investment attraction is needed within this year.

Based on the ongoing retail laundry service "Lundrigo," the food, clothing, and housing company Co., Ltd. has a strategy to penetrate the distribution business area in the "clothing, food, and state" sector, and the distribution business in that sector has a strong margin rate in common.

Therefore, if we don't achieve significant results in areas other than the laundry industry, which is a deficit business, we have doubts about how long we can continue to attract additional investments to offset cash burn in the current frozen investment environment.