Mardi Mercredi market value shrinks to one-sixth of IPO value

Mardi Mercredi's market capitalization plummeted from 300 billion won at its June KOSDAQ listing to the 50 billion won level in just four months. The decline follows a sharp drop in revenue growth and an increase in the cost-to-sales ratio to the 40% range.

The trajectory of the fashion brand Mardi Mercredi (operated by Peace Peace Studio), which entered the KOSDAQ market this past June, is unusual. At the time of its listing, the company recorded an offering price of 21,500 won and formed a market capitalization in the 300 billion won range, but its stock price plummeted to the 3,700 won range in just four months. Its market capitalization also fell sharply to the 50 billion won level, shrinking to one-sixth of its value immediately after listing.

In a video provided by Understanding: All the Knowledge in the World, accountant Lee Jae-yong analyzed how to evaluate the value of fashion companies sensitive to trends using the case of Mardi Mercredi. In particular, he pointed out how the numbers appearing on financial statements connect to the intentions of management.

Growth rates stall for fashion firm; management's true intentions hidden in 'inventory'

Lee Jae-yong emphasized that to grasp a company's true intentions, one must examine the flow of inventory assets. This means that a decrease in inventory should not simply be interpreted as "goods being sold well and exhausting stock." It is necessary to distinguish whether a decrease in inventory is due to strong sales or because production volume was reduced in the first place. He explained that to see the true intentions of a company, one must reverse-calculate how management judges future demand by looking at how inventory assets are reflected in financial statements and how annual production amounts change each year.

Looking at the company's financial statements, it is evident that the revenue growth rate and operating profit margin have sharply declined. The revenue growth rate, which reached 83% in 2023, gradually stagnated thereafter, and the operating profit margin also dropped dramatically. Of particular note is the rise in the cost-to-sales ratio. While the cost ratio in the fashion industry typically stays around 20% of the selling price (a 5x multiple), this company's cost ratio soared to the 40% range. This is read as a signal that there is a high possibility that products were not sold at full price but were instead cleared through sales (discounted sales) to dispose of inventory.

The fact that this company significantly increased production for one year and then drastically reduced it the following year serves as strong evidence that management views future demand lowly. In other words, the reduction in inventory was identified as one of the core causes of the decline in corporate value, resulting from "production cuts" rather than being a result of strong sales. It appears that the result of management reducing production because they themselves view the future darkly has been revealed in the financial statements.

When investment becomes a poison: the dilution of 'brand value'

The case of Mardi Mercredi is cited as a typical example showing that venture investment can be poison for brand-driven companies. Peace Peace Studio reached its peak in 2023 by attracting investments of approximately 50 billion won. At that time, the so-called "Samma" brands—including Mardi Mercredi, Matte Kim, and Matin Kim—were highly recognized for their corporate value as they gained great popularity among young women. The corporate value recognized at that time was reported to be around 150 billion won.

However, Lee Jae-yong warned that once investment is attracted, a company's spending habits change. When large amounts of capital flow in, companies attempt aggressive expansions, such as hiring large numbers of personnel and rapidly increasing the number of stores. In the process of a company growing from 500 employees to 1,000 or 2,000, the original identity and talent profile the company aimed for can be diluted. As the organization becomes heavy, if the speed of revenue growth fails to meet expectations, companies may fall into a vicious cycle of seeking investors again because they cannot handle the rapidly exiting cash.

In particular, as the number of stores increases, brand scarcity decreases. While it is possible to attempt external expansion, such as increasing stores from 5 to 50 based on investment funds, if there are too many stores, consumers will no longer be enthusiastic about the brand. According to Lee's analysis, while people line up to purchase when a specific brand maintains a "hip" image, the brand value can be damaged when it becomes easily accessible everywhere.

Timing of the listing: has it entered a 'declining phase'?

The timing of Mardi Mercredi's listing is also a subject of controversy. The company proceeded with its listing during a period when performance had peaked and began to decline. At the time of its KOSDAQ listing in June 2026, the market accepted the listing by assigning a high value, with the price-to-earnings ratio (PER) reaching approximately 20 times its profit, but as a result, the stock price plummeted. Although the company entered with a market capitalization in the 300 billion won range at the time of listing, its value shrank to one-sixth in just four months.

Lee Jae-yong explained that when investors judge listed companies, the most important thing is to distinguish "whether this company is currently growing or is temporarily shrinking." In the case of fashion companies, one can read how management forecasts the future by reverse-calculating the inventory flow and changes in production amounts on the financial statements. This is why, in the fashion industry where corporate value fluctuates according to trends, an eye is needed to read the intentions of management hidden within the numbers.

Source: original video (YouTube)