Operating Loss of 19.8 Billion Won... Sales Down 40% Year-on-Year
[Asia Economy Reporter Cha Min-young] Hotel Shilla posted poor results in both its duty-free business and hotel and leisure business in the third quarter due to the impact of the novel coronavirus infection (COVID-19). As management difficulties intensified, the completion of the Hanok traditional hotel has been postponed, and the company plans to focus on improving management efficiency for the time being.
Hotel Shilla announced on the 30th that its consolidated operating loss for the third quarter of this year was preliminarily estimated at 19.8 billion KRW, turning to a deficit compared to the same period last year. During the same period, sales amounted to 879.5 billion KRW, down 40.4%, and the net loss for the period was 28.5 billion KRW, also turning to a deficit. The operating profit margin recorded minus (-) 2.3%.
Sales in the duty-free (TR) sector amounted to 771 billion KRW, down 42% from the previous year, with an operating loss of 14.2 billion KRW. Sales at domestic downtown stores and airport stores decreased by 23% and 77%, respectively, compared to the previous year.
Sales in the hotel and leisure sector were 108.5 billion KRW, down 21% from the previous year, with an estimated operating loss of 5.6 billion KRW. However, this was an improvement compared to the previous quarter's (-16 billion KRW) operating performance.
Meanwhile, Hotel Shilla announced through a disclosure that, for the purpose of improving management efficiency, construction of the Hanok traditional hotel will be suspended at the end of October and will resume in August next year after a 10-month grace period. The initially planned investment amount was 231.8 billion KRW, which corresponds to 30.3% of its equity capital. The completion date of the investment was also delayed from January 2023 to May 2024.
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