[Click eStock] "Hansome Q1 Earnings Slump... Cost Efficiency Is Key"

NH Investment & Securities analyzed on the 8th that Hansome's performance improvement depends on future cost efficiency, including selling and administrative expenses. Accordingly, they maintained a 'Buy' investment rating and a target price of 25,000 KRW.

Researcher Ji-yoon Jeong of NH Investment & Securities stated, "The operating profit for the first quarter is estimated at 32.5 billion KRW, down 40% year-on-year, falling 9% short of estimates," adding, "Considering that selling and administrative expenses slightly increased in the first quarter as well, future cost efficiency is crucial."

In the first quarter, sales growth rates by category in domestic department stores showed a 2.4% decrease in women's formal wear compared to last year, a 1.5% increase in women's casual wear, and a 0.8% decline in men's clothing. Researcher Jeong explained, "offline business conditions were sluggish," and "the contribution of imported brand sales, which had been steadily expanding since 2023, is still estimated to be below 5%."

The overall operating profit margin recorded 8.2%, down 5.1 percentage points year-on-year. This was due to decreased demand for Hansome's high-priced casual brands amid consumer downturn and an increased sales proportion from low-margin outlet channels.

The situation is expected to improve from the second quarter. Researcher Jeong analyzed, "From the second quarter, the burden of the performance base will ease, and the opening of the U.S. street brand 'KITH' store in May is expected to attract customers both domestically and internationally."

She added, "The number of brands entering the online platform EQL also increased by 40% year-on-year, with transaction amounts continuously growing targeting 40 billion KRW in 2022, 70 billion KRW in 2023, and 100 billion KRW in 2024."