[Click eStock] Hyundai Department Store, Trusting Duty-Free Shops and Luxury Brands

Duty-Free Store Operating Loss Expected to Decrease by 30 Billion Won Year-on-Year This Year
Luxury Consumption Expansion Also Positive...High-End Department Store Image Effective

[Asia Economy Reporter Minwoo Lee] Despite adverse factors such as China's ban on Korean content (Hallyu ban), Hyundai Department Store is expected to achieve performance that does not fall short of market forecasts. As the luxury goods and duty-free store sectors continue to show steady growth, it is anticipated that this year will surpass last year's results.

On the 22nd, Ebest Investment & Securities estimated that Hyundai Department Store's sales for the fourth quarter of last year would reach 617.7 billion KRW, with an operating profit of 99.1 billion KRW. This represents increases of 16.4% and 0.4% respectively compared to the same period last year, aligning with market consensus.

Sales growth in the department store sector was only 1% compared to the same period last year. This is attributed to decreased demand for major seasonal products due to warmer weather than usual. However, the luxury goods sector has consistently shown double-digit growth, suggesting a positive impact on overall performance this year as well.

The duty-free store sector showed favorable growth. Daily sales steadily increased to 2.1 billion KRW in October, 2.4 billion KRW in November, and 2.4 to 2.5 billion KRW in December. Operating losses have gradually decreased to around 13.7 billion KRW, down from 25.6 billion KRW in the same period last year and 17.1 billion KRW in the previous quarter. Orina, a researcher at Ebest Investment & Securities, stated, "Duty-free store customer attraction is stabilizing, and with favorable business conditions, the burden of commission fees is easing." She added, "Operating losses in the duty-free sector this year are expected to be about 43.5 billion KRW, approximately 30 billion KRW less than last year."

This year's expected performance is sales of 2.75 trillion KRW and operating profit of 333 billion KRW, representing increases of 24.7% and 16.4% respectively compared to last year. Ebest Investment & Securities gave Hyundai Department Store a 'Buy' rating with a target price of 110,000 KRW. The closing price the previous day was 84,000 KRW. Researcher Oh explained, "The target price was raised reflecting the opening of new duty-free stores," and added, "With the expansion of duty-free stores, the scale is growing, and the recent spread of luxury consumption highlights its status as a premium department store."