[Click eStock] “Shinsegae Drives Improvement in Department Store Segment Performance in Q2”

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 400,000 KRW for Shinsegae on the 8th.

Shinsegae's total sales and operating profit for the second quarter are expected to increase by 30% and 41%, respectively, reaching 2.9977 trillion KRW and 135.2 billion KRW.

By segment, the department store growth rate is estimated to be around 18%. This is attributed to sustained favorable consumer sentiment, with the endemic expectations driving a continued surge in high-margin fashion sales. Yujeonghyun Yoo, a researcher at Daishin Securities, stated, “The Daejeon branch, which opened at the end of August last year, also exceeded its performance targets in the second quarter, maintaining a positive operating profit trend. The department store segment showed consistently strong results across both existing and new stores.”

The Shinsegae DF segment recorded daily duty-free sales in the mid-90 billion KRW range in the second quarter, similar to the first quarter, due to the impact of the China lockdown. Operating profit appears to have turned positive in the second quarter from a first-quarter loss due to eased market competition. Despite sluggish duty-free daigou channels, Shinsegae Inter is expected to significantly improve profitability year-over-year, posting an operating profit of 33 billion KRW, driven by strong sales of high-end overseas fashion and imported cosmetics, similar to the department store division.

Researcher Yoo analyzed, “Domestic consumption showed solid growth until the first half of this year, but considering the somewhat gradual increase in outbound travel due to overseas airfare burdens, there is still considerable domestic consumption capacity.”

However, due to concerns over a global economic downturn, domestic consumption levels are expected to decline in the second half of the year. Yoo added, “Among the three major department stores, the store portfolio is concentrated in regions with high purchasing power, and the growth potential within department stores contributed by the Daejeon and Gwangju branches is analyzed to be high.”