Convenience Stores and Supers 'Double Pull'... GS Retail's Q1 'Earnings Surprise'

Operating Profit 73.9 Billion KRW, Up 16.6% Year-on-Year

GS Retail recorded an earnings surprise in the first quarter. This was thanks to balanced increases in sales and operating profits across its core businesses: convenience stores, supermarkets, and hotels. Although the home shopping division saw a slight decline in sales due to a decrease in TV viewership, it succeeded in cost management, resulting in increased profits.

According to the Financial Supervisory Service's electronic disclosure system on the 9th, GS Retail posted sales of 2.8104 trillion KRW and operating profit of 73.9 billion KRW in the first quarter. These figures represent increases of 5.1% and 16.6%, respectively, compared to the same period last year. Net profit for the period was 38.8 billion KRW, up 118% year-on-year. Considering that the market had forecasted GS Retail's first-quarter operating profit at 65.1 billion KRW, the actual results far exceeded expectations.

By business division, the convenience store, supermarket, and hotel sectors drove the performance growth. The convenience store (GS25) division recorded sales of 1.9683 trillion KRW, a 5.4% increase year-on-year, and operating profit rose 15% to 26.3 billion KRW. This growth is attributed to continued new store openings, which boosted both sales and operating profit. In fact, in the first quarter, the number of competitor convenience stores converted to GS25 was 2.8 times higher than the number of GS25 stores converted to competitors. Convenience stores generally have a relatively low average purchase amount per customer, but in the first quarter of this year, this figure increased by 3.1%, maintaining an upward trend.

The supermarket (GS The Fresh) division also showed strong growth, recording sales of 380.9 billion KRW and operating profit of 9.9 billion KRW, representing increases of 11.6% and 130%, respectively, compared to the first quarter of last year. GS The Fresh achieved robust growth through new store openings and increased sales at existing stores. Twenty-nine new stores opened in the first quarter alone. GS The Fresh is expected to continue benefiting from new store openings in the second quarter as it approaches the milestone of 500 stores in July.

The hotel (Parnas) division posted sales of 109.7 billion KRW and operating profit of 24.3 billion KRW, increases of 12% and 13%, respectively, over the same period last year. The performance improvement was mainly driven by increased sales at the business hotel 'Nine Tree' in Yongsan and the Jeju hotel. The Jeju hotel's occupancy rate rose from 53% in the first quarter of last year to 75.6% in the first quarter of this year, an increase of 20 percentage points. The longer operating days of the 'Infinity Pool' compared to the first quarter of last year also contributed to the improved results.

The home shopping (GS Home Shopping) division faced a deteriorating operating environment due to a decline in TV viewership but achieved profit growth through cost improvements. GS Home Shopping recorded sales of 290.1 billion KRW, a decrease of about 5% year-on-year. Operating profit increased by 1.2 billion KRW to 32.8 billion KRW, attributed to efficiency improvements in selling and administrative expenses such as promotional costs, leading to enhanced profitability.

A GS Retail official explained, “Differentiated products by business and strategies connecting online and offline platforms created synergies alongside company-wide efficiency improvements, enabling us to achieve improved results despite challenging market conditions.”