The company said fierce competition in the country's cosmetics industry, combined with its heavy investment in research and development of new products, led to the poor earnings results.

Tonymoly Co. reported a net loss of 3.5 billion won, with 800 million won of operating loss on a consolidated basis during the cited period, according to the company.

South Korea's mid-sized beauty firms' profitability deteriorated following a diplomatic row between Seoul and Beijing last year, which led to a sharp drop in the number of tourists coming to South Korea.

Industry watchers said the expansion of online and duty-free channels has hurt the mid-sized companies which that rely on offline stores.

Last month, Skinfood was placed under a Seoul court's receivership after the company said that it is having temporary difficulty in securing liquidity due to excessive debt.

"We are making efforts to improve our profitability and strengthen our online business," an official from Nature Republic Co. said.

Nature Republic reduced the number of its stores to 680 by the first half of this year from 770 in 2015. The company reported 58.8 billion won in sales and 300 million won in operating income in the third quarter of this year. (Yonhap)