[Click eStock] "GS Retail's Q1 Performance Expected to Be More Stable Than Anticipated Despite COVID-19 Impact"

[Asia Economy Reporter Eunmo Koo] Hanwha Investment & Securities expects GS Retail's first-quarter performance this year to be more stable than anticipated despite the impact of the novel coronavirus disease (COVID-19).

Nam Seonghyun, a researcher at Hanwha Investment & Securities, estimated in a report on the 9th that GS Retail's first-quarter sales would increase by 2.9% year-on-year to KRW 2.1426 trillion, and operating profit would rise by 1.2% to KRW 21.7 billion. Researcher Nam explained, "In the case of convenience stores, sales are expected to decline compared to initial expectations due to sluggish sales in entertainment districts, academies, and the Daegu-Gyeongbuk region. However, recovery of existing stores centered around residential areas has been occurring since March, and growth is expected to be maintained through new store openings in last year and the first quarter of this year."

He added, "Supermarkets, which are nearby channels, are expected to improve profitability due to increased traffic, closure of loss-making stores last year, and product efficiency improvements. The Parnas Hotel is already undergoing renovations, so the operational impact from COVID-19 is judged to be minimal."

He diagnosed that the growth rate of existing convenience stores has somewhat recovered since March. Researcher Nam explained, "As the number of COVID-19 confirmed cases decreases, the Daegu-Gyeongbuk region, which experienced the worst situation, is recovering, customer attraction is rising mainly in residential areas, and sales in some academy and entertainment districts are gradually recovering." However, the pace of new store openings is expected to slow down compared to expectations due to fixed cost burdens amid the deteriorating consumer market.