Shinsegae Reports Q1 Operating Profit of 123.6 Billion Won, a 'Surprise Performance'... Highest Quarterly Profit Ever (Comprehensive)

Shinsegae Department Store Gangnam Branch.

Sales of 1.32 trillion KRW up 10.3% · Operating Profit of 123.6 billion KRW up 37 times... "Record Highest Profit in Q1"
Domestic and Overseas Fashion Genres Revive, Department Store and SI Performance Recover
Duty-Free Business Posts Consecutive Quarterly Profits... Casamia Records Best Performance, Signs of Turning to Profit

[Asia Economy Reporter Kim Yuri] Shinsegae achieved the highest profit ever in the first quarter. This accomplishment was based on the growth of department store sales driven by the recovery of consumer sentiment and the improved performance of consolidated subsidiaries such as duty-free shops.

On the 12th, Shinsegae announced that its operating profit for the first quarter of this year was 123.6 billion KRW, an increase of 3659.2% compared to the same period last year. This surprising result far exceeded the financial investment industry's estimate of 89.2 billion KRW. During the same period, sales increased by 10.3% to 1.32 trillion KRW, and net profit rose by 5451.2% to 89.2 billion KRW.

Regarding Shinsegae's strong Q1 performance, the company stated, "It is significant that the department stores and consolidated subsidiaries quickly recovered both sales scale and profitability through crisis management capabilities in response to the prolonged COVID-19 pandemic."

The department stores recorded sales of 493.2 billion KRW in the first quarter, a 23.8% increase compared to the same period last year. Operating profit reached a record high of 82.3 billion KRW, approximately three times higher than in Q1 of the previous year. The department store results include the separate corporation performances of Daegu, Gwangju, and Daejeon (excluding Simon-operated outlets). Compared to 2019, sales increased by 7.8% and operating profit by 17.9%. This indicates a stable growth trajectory overcoming the COVID-19 crisis.

Shinsegae Department Store attributes the improved performance largely to the solid results of large stores based on metropolitan areas such as Gangnam, Centum City, Daegu Shinsegae, and Gwangju Shinsegae, as well as the strong growth in domestic and international fashion genres driven by the recovery of consumer sentiment. The major genre growth rates in Q1 were 35% for men's fashion, 25% for women's fashion, 37% for sports, and 58% for luxury goods.

The improved performance of consolidated subsidiaries such as International, DF, Central City, and Casamia is also notable. DF recorded sales of 478.9 billion KRW and operating profit of 23.1 billion KRW, continuing profitable management. This was helped by the conversion of Incheon Airport duty-free shop rent to an operating rate system since September last year and reduced accounting expenses due to asset impairments recognized in 2019 and 2020. Additionally, actively utilizing support measures for the duty-free industry, such as domestic sales of duty-free goods and non-landing flights, contributed to the performance improvement.

International posted sales of 341.9 billion KRW and operating profit of 21.3 billion KRW, marking solid results in overseas fashion business and cosmetics sectors, as well as increased domestic fashion consumption, continuing from Q4 last year. These figures represent increases of 5.7% and 77.5%, respectively, compared to the same period last year. Overseas fashion grew by 21.4% year-on-year, and the cosmetics sector showed strong performance due to increased domestic demand for imported cosmetics. Domestic fashion improved business efficiency through brand rationalization and strengthening online brands, successfully turning operating profit positive. The company expects "International's domestic fashion performance to become more visible in Q2."

Central City also recorded sales of 59.7 billion KRW and operating profit of 15.8 billion KRW, increases of 7.2% and 34.8%, respectively, compared to the same period last year, driven by increased hotel and department store rental income.

Casamia achieved sales of 49.5 billion KRW, growing 46.4% year-on-year, thanks to new store openings, expansion of online presence (Good.com), and premium product line expansion. Operating loss was 1 billion KRW, reducing the deficit by 1.7 billion KRW.

A Shinsegae official said, "Despite difficult business conditions, we recorded the highest profit ever in Q1, centered on the competitiveness of large department stores such as Gangnam and the sales growth of International's fashion and cosmetics." He added, "For the remainder of this year, we expect even better performance based on new store openings in Daejeon, renovations of Gangnam and Gyeonggi stores, and continuous growth of subsidiaries such as International and Casamia."