Sephora entered the South Korean market in 2019, with a flagship in the upscale Gangnam District in south Seoul but has succumbed to stiff local competition and mounting losses. In a statement posted on the retailer's Korean social media accounts, the company said it would gradually terminate all its operations, including its app, online, and physical stores. 

"With heavy hearts, we have decided to cease operations in Korea. From May 6, we will gradually wind down our presence across online platforms, mobile applications, and physical stores, ultimately withdrawing completely from the market," according to a social media post by Sephora Korea. 

Department stores and duty-free outlets also remain popular in the market for prestige and luxury beauty, but it was South Korean international conglomerate CJ Group's beauty retailer CJ Olive Young that proved to be Sephoras's undoing.

Opened in 1999, CJ Olive Young dominates the market operating over 1,300+ stores in South Korea, selling a mix of mass and prestige health, cosmetics, and household products all under one roof. With around 90% market share, CJ Olive Young reported 3.86 trillion won ($2.88 billion) in revenue in 2023, up 39% year-on-year with an estimated operating margin of some 10.7% last year.

Sephora's original market strategy called for 14 stores by 2022, but the retailer faced escalating operating losses, increasing from 12.4 billion won ($9.2 million) in 2020 to 17.6 billion won in 2022 according to The Korea Herald.

The business will start winding down on May 6, but Sephora’s customer service team in Korea will continue operating until mid-August for returns and refunds. Loyalty members will lose any unused points and have their information deleted.

HSBC estimates Sephora had €14.4 billion($15.5 billion) in sales last year and generated €1.4 billion ($1.5 billion) in earnings before interest and taxes. Chief Executive Guillaume Motte told the Financial Times Sephora has the potential to reach €20 billon ($21.6 billion)  in sales.

The retailer has about 3,000 stores in 35 countries and about 46,000 employees. Its presence in Asia is growing, with over 200 stores in Australia, China, Singapore, Malaysia, Thailand, Indonesia, and India.