Warm Autumn Feels Cruel... Hyundai Department Store's 3Q Operating Profit Down 12.7% YoY

Department Store Operating Profit Down 11% Year-on-Year
FW Season Fashion Sales Decline and
Impact of Connect Hyundai Busan Construction

Subsidiary Duty-Free Shops Also Hit by Weak Chinese Demand
Strengthened Shareholder Returns... Annual Dividend Expansion
Decision to Cancel 69.4 Billion KRW of Treasury Shares

Hyundai Department Store recorded slightly decreased earnings in the third quarter of this year compared to last year. The prolonged heat into early autumn led to a decline in fall and winter (FW) season clothing sales, and its subsidiary Hyundai Duty Free also suffered from sluggish domestic demand in China. The company also announced plans to enhance shareholder value, including treasury stock cancellation and increased dividends.

Hyundai Department Store disclosed on the 7th that its consolidated operating profit for the third quarter of this year was preliminarily estimated at 64.6 billion KRW, down 12.7% from the same period last year. During the same period, sales increased by 3.2% to 1.0368 trillion KRW, while net profit dropped 54.8% to 28.4 billion KRW.

Hyundai Department Store logo. Provided by Hyundai Department Store

Hyundai Department Store's third-quarter performance was in line with market expectations. Earlier, securities firms forecasted that Hyundai Department Store would record sales of 1.0307 trillion KRW and operating profit of 66.7 billion KRW in the third quarter of this year.

Excluding subsidiaries, Hyundai Department Store's third-quarter sales decreased by 2.1% year-on-year to 568.3 billion KRW, and operating profit fell 11% to 71 billion KRW. A Hyundai Department Store official explained, "Connect Hyundai Busan temporarily suspended operations due to renovation work, and the warm weather this year led to a decline in fall and winter (FW) season fashion sales."

Hyundai Duty Free posted third-quarter sales of 228.2 billion KRW and an operating loss of 8 billion KRW. Compared to the same period last year, sales decreased by 3.9%, and operating profit turned to a loss. A Hyundai Department Store official stated, "The duty-free store at Incheon Airport recorded a profit due to increased passenger volume and attracting competitive brands," but added, "Overall duty-free sales and operating profit declined due to sluggish domestic demand in China and changes in foreign tourist trends."

The separately reported sales of Zinus, a furniture and mattress subsidiary, showed strong growth. Zinus's third-quarter sales increased by 23.2% year-on-year to 272.9 billion KRW, and operating profit surged 277.1% to 19.9 billion KRW. A Hyundai Department Store official said, "Zinus saw an increase in total production and sales as orders normalized in its core North American mattress market, resulting in growth in both sales and operating profit." The official added, "Especially this year, the transition from the existing 'Big Box' product to the new 'Small Box,' which improved compression rates by more than 50%, significantly enhanced profitability, achieving a structural turnaround."

Meanwhile, Hyundai Department Store also announced plans to enhance corporate value, including treasury stock cancellation. According to the plan, Hyundai Department Store decided to cancel 773,628 shares, equivalent to 3.3% of its treasury stock holdings. The treasury stocks to be canceled are valued at approximately 69.36951 billion KRW and are scheduled to be canceled on the 14th.

Dividends will also be increased annually. Starting in 2025, in addition to the existing year-end dividend, a semi-annual dividend of at least 10 billion KRW will be implemented. The total annual dividend payout will also be gradually increased to around 50 billion KRW by 2027.