Recovery of Consumer Sentiment in the 'With Corona' Era: Which Retail Stocks Benefit?

Department Stores Benefit Until Overseas Travel Resumes
Duty-Free Shops' Performance Improves Once Overseas Travel Restarts

[Asia Economy Reporter Ji Yeon-jin] The securities industry is busy searching for 'With Corona' beneficiary stocks as COVID-19 vaccination rates increase. It is expected that when infectious disease quarantine measures are relaxed domestically, suppressed consumer sentiment will revive, boosting the performance of distribution companies, while forecasts suggest mixed fortunes across industries.

According to the financial investment industry on the 19th, department stores are expected to see the most favorable performance and performance momentum during the With Corona period as consumer sentiment recovers and overseas travel remains suspended. Since overseas travel resumption could shift 'luxury runs' demand to overseas travel, it is pointed out that this could rather be a burden.

However, if overseas travel resumes, duty-free shops can expect sales recovery at Incheon Airport stores due to increased domestic travelers, relief from rental burdens, and improved profitability of downtown duty-free shops from the recovery of Chinese inbound tourists. Hotel Shilla's operating profit is estimated to increase to 300 billion KRW next year and 400 billion KRW in 2023. Researcher Park Jong-dae of Hana Financial Investment said, "In the short term, attention should be paid to Shinsegae, and in the mid to long term, to Hotel Shilla."

Cosmetics companies continue to benefit from the recovery of Chinese cosmetics consumption this year. Additionally, as the year-end approaches the With Corona period, it is analyzed that benefits from the recovery of color cosmetics consumption next year can also be expected. If global travel resumes in the second half of next year, a stepwise performance improvement is anticipated through the recovery of sales in duty-free channels. Researcher Park said, "Cosmax continues to show outstanding performance, and from a long-term perspective, a bottom-fishing strategy for AmorePacific and LG Household & Health Care, which have strong brand power in China, is also effective."

The apparel sector is also expected to benefit. Since July, the spread of the COVID-19 Delta variant limited the rise in stock prices of apparel companies that showed correlation with economic consumption patterns. However, if the With Corona era continues domestically, in an environment where consumer sentiment recovers, sales rebounds of apparel companies due to improved offline traffic can be expected. Shinsegae International, which maintains stable performance growth based on an imported brand portfolio, is considered the biggest beneficiary.