[Click eStock] "Hansome, Focus on Expanding Imported Brands"

NH Investment & Securities Report

NH Investment & Securities maintained a buy rating on Hansem on the 11th and lowered the target price by 8% to 33,000 KRW. This is due to a downward revision of this year's net profit estimates.

In the first quarter, the company's consolidated sales are expected to reach 397.4 billion KRW, a 2% increase compared to the same period last year, while operating profit is projected to decrease by 15% to 50.3 billion KRW. By channel growth rates, online sales are expected to decline by about 2%, whereas offline sales are forecasted to grow by 3%.

Jiyoon Jeong, a researcher at NH Investment & Securities, stated, “Although the first quarter inevitably faces a challenging base effect across the industry, the recovery from January to February-March is clear. Considering the existing store growth rate of 9% at department stores, which are the main sales channels in February, and the growth rates of women's suits and casual wear at 16% and 30% respectively, Hansem is expected to maintain its position as the number one women's wear operator.”

However, the operating profit margin for the first quarter is estimated at 12.7%. Profitability is expected to decline due to the costs associated with launching imported brands. The company is actively launching imported brands based on exclusive distribution rights for brands such as 'Our Legacy,' 'Gabriela Hearst,' 'Veronica Beard,' and 'Tot?me.'

Researcher Jeong added, “With the expansion of imported contemporary zones and active reorganization of new brand MDs at the three major domestic department stores, it is worth paying attention to the direction of new business. The online select shop EQL surpassed 40 billion KRW in transaction volume last year and is targeting 70 billion KRW this year, continuously expanding the entry of new young casual and indie brands.” The company is preparing to enter a flagship store in Seongsu-dong in the third quarter and plans to expand its offline channel targeting the MZ generation in addition to women's wear.