Discount Stores and Traders Slump... Emart Turns to Loss Despite Achieving 7 Trillion Won Sales for 2 Consecutive Quarters (Comprehensive)

[Asia Economy Reporter Jeon Jinyoung] Emart continued its growth by surpassing 7 trillion won in consolidated sales for the second consecutive quarter. However, operating profit turned to a loss due to poor performance of discount stores and Emart Traders, increased selling and administrative expenses such as labor costs, and depreciation from the acquisition of Gmarket.

Emart announced on the 11th that it posted an operating loss of 12.3 billion won on a consolidated basis in the second quarter, turning to a deficit. During the same period, sales increased by 21.9% to 7.1473 trillion won, and net loss amounted to 63.1 billion won, also turning to a deficit. Sales exceeded 7 trillion won again following the first quarter, marking the highest quarterly figure.

Looking at the performance by business division, total sales of discount stores increased by 4.1% year-on-year to 2.9002 trillion won, and existing stores also grew by 3.8%, continuing an eight-quarter growth streak. However, operating loss was 36.4 billion won due to increased selling and administrative expenses such as labor costs. Traders’ operating profit decreased from 24.2 billion won to 13.8 billion won, and sales slightly declined by 0.4% to 797.4 billion won.

Poor performance of subsidiaries SSG.com and Gmarket also had an impact. SSG.com’s operating loss in the second quarter increased from 26.5 billion won last year to 40.5 billion won. Sales recorded a 21.1% increase to 423.1 billion won. The operating loss of 18.2 billion won from Gmarket, which was incorporated this year, was also reflected. Starbucks’ operating profit in the second quarter decreased by 5.8% to 47.5 billion won, while sales increased by 15.2% to 665.9 billion won.

However, Chosun Hotel & Resort’s second-quarter sales rose 62.6% year-on-year to 116.5 billion won, and operating profit improved by 20.6 billion won to a surplus of 1.4 billion won. Emart24’s second-quarter operating profit increased by 3.5 billion won year-on-year to 4.3 billion won, achieving an operating profit surplus for the first half of the year. The number of stores increased by 176 to a total of 6,204.

An Emart official stated, “We continued to achieve record-high sales through balanced growth of online and offline affiliates. In the second half, we will further improve profitability by strengthening product competitiveness, expanding PL products, and enhancing logistics efficiency.”