Sales of 1.5634 trillion KRW... 11.5%↓
Department store operating profit 110.3 billion KRW, 9.2% decrease
DF operating profit 24.3 billion KRW, turned profitable
Shinsegae received results below market expectations due to a high base effect from last year's strong performance and increased costs caused by high inflation. However, despite the weakened consumer sentiment, the department stores continued their external growth, and the operating profit of consolidated companies such as DF also showed improvement.
Shinsegae announced on the 10th that its consolidated operating profit for the first quarter of this year was 152.4 billion KRW, a 6.8% decrease compared to the same period last year. Sales during the same period fell 11.5% to 1.5634 trillion KRW. Net profit was 128.6 billion KRW, down 14.8%. These figures fall short of the first quarter earnings consensus (estimates) compiled by FnGuide, which projected an operating profit of 154.9 billion KRW and sales of 1.7184 trillion KRW for Shinsegae.
The department store's first-quarter operating profit recorded 110.3 billion KRW, down 9.2% year-on-year. This was due to special incentive payments following last year's record achievements and increased management expenses linked to inflation. Sales rose 6.1% from the first quarter of last year to 620.9 billion KRW, showing continuous growth. This includes results from separate entities such as Gwangju, Daegu, and Daejeon Shinsegae.
The department stores explained that their online and offline scale grew through the opening of a premium golf specialty store (Gangnam branch), Hyper Ground targeting the MZ generation (Millennials + Generation Z) (Centum City branch), and the SSG.com Shinsegae Department Store Mall 'Sinbaek Gift Hall.' Shinsegae Department Store plans to continue this growth by renovating the men's specialty store at the Gangnam branch, which was renewed and opened last month, refurbishing the young fashion specialty store at the Gangnam branch in the second half of the year, and expanding the Sinbaek Gift Hall at the SSG.com Shinsegae Department Store Mall.
Shinsegae DF (duty-free shop) recorded an operating profit of 24.3 billion KRW in the first quarter, turning profitable. Sales were 511.2 billion KRW, down 33.8%. Although sales decreased compared to the previous year, operating profit improved due to increased sales from individual travelers (FIT) and the effect of a refund from a 50% reduction in license fees last year.
Shinsegae Central City also recorded an operating profit of 21.8 billion KRW, up 42.5%, due to increased hotel occupancy rates and improved performance of leased stores. Sales also rose 21.2% to 84.3 billion KRW.
Shinsegae International posted an operating profit of 10.3 billion KRW and sales of 312.2 billion KRW, down 11.4% and 68.8%, respectively. The decline in sales and operating profit in the fashion division was due to the restructuring of the domestic fashion sourcing business and the termination of contracts with some brands in the overseas fashion division. However, the cosmetics division (16.8%) and domestic fashion division (11.2%) continued their sales growth. Shinsegae International plans to recover performance by launching more than four new brands in the fashion division and more than three new brands in the cosmetics division within the year.
Shinsegae Casa and Shinsegae Live Shopping recorded operating losses of 8.8 billion KRW and 0.6 billion KRW, respectively, due to external factors such as the real estate market downturn and increased offline shopping demand from reopening (economic resumption).
A Shinsegae official said, "Despite the challenging business environment caused by high interest rates and inflation, we achieved external growth in department stores and improved performance in consolidated companies such as DF." He added, "We will continue to strengthen our business structure and sustain results through constant spatial innovation and enhancement of online content."
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