[Click eStock] Shinsegae International, Concerns Over Cosmetics Profit Decline 'Become Reality'

[Asia Economy Reporter Junho Hwang] Hana Financial Investment lowered the target price of Shinsegae International to 200,000 KRW on the 10th. This adjustment is due to the decline in profits in the cosmetics sector.

Shinsegae International's sales for the third quarter of this year were recorded at 350.2 billion KRW, a 5% increase compared to the previous year. Operating profit rose by 103% to 14.1 billion KRW. Although the performance growth exceeded 100%, it did not surpass market expectations.

Sales in the overseas fashion sector grew by 15% year-on-year, driving performance improvement. Imported cosmetics sales also grew rapidly by 36%, but sales of the in-house cosmetics brand amounted to only 21.2 billion KRW, a 47% decrease. The household goods sector showed an 11% growth in sales but recorded an operating loss of 2.5 billion KRW. Meanwhile, domestic fashion sales declined by 9%, resulting in an operating loss of 2.7 billion KRW. Despite an increase in women's wear sales, the brand 'Days,' targeted at large discount stores, sharply declined. In the cosmetics sector, sales decreased by 1%, and operating profit fell by 25% year-on-year to 7.2 billion KRW.

Hyunjung Seo, a researcher at Hana Financial Investment, analyzed, "It is expected to take some time for Shinsegae International's performance and stock price to recover," adding, "This is because the decline in sales growth rate of the in-house cosmetics brand, especially 'Vidi Vici,' has not been resolved." In the third quarter of this year, Vidi Vici's sales amounted to 18.2 billion KRW, a 53% decrease compared to the previous year.