Department Store Division Sees 1% Growth in Both Sales and Operating Profit
Duty-Free Store Narrows Deficit Thanks to Expanded Airport Store Operations
Despite accounting adjustments due to changes in the standard for ordinary wages, Hyundai Department Store's operating profit in the department store division grew by 12% year-on-year in the fourth quarter of last year.
According to the Financial Supervisory Service's electronic disclosure system on the 11th, Hyundai Department Store recorded an operating profit of 107.9 billion KRW in the fourth quarter, a 12.4% increase compared to the same period last year. Sales reached 1.1752 trillion KRW, up 3.5% year-on-year, and net profit turned positive at 45.5 billion KRW. The operating profit figure includes 12.2 billion KRW reflected in the accounting books due to the change in the ordinary wage standard.
However, the fourth-quarter results met market expectations. The market had forecasted fourth-quarter sales of 1.1754 trillion KRW and operating profit of 106.1 billion KRW, with the actual operating profit exceeding expectations by 1.8 billion KRW.
On an annual basis, sales totaled 4.1876 trillion KRW and operating profit was 284.2 billion KRW, representing decreases of 0.5% and 6.4%, respectively, compared to 2023. Net loss narrowed to 800 million KRW. Although Hyundai Duty Free and the furniture subsidiary Zinus recorded operating losses, department store sales were understood to have increased year-on-year.
The department store division's annual sales last year were 2.4346 trillion KRW, and operating profit was 358.9 billion KRW, marking increases of 1.3% and 0.8%, respectively, compared to the previous year. Despite a full-scale domestic demand slump, sales growth was driven by luxury goods, young fashion, and sports categories. In particular, during the fourth quarter, which sees high demand for year-end gifts, expensive products such as luxury goods, watches, and jewelry sold well, resulting in approximately a 0.8% sales increase during this period alone.
A Hyundai Department Store official explained, "Despite increased costs due to the suspension of operations for the Connect Hyundai Busan renovation and the provision for estimated ordinary wage liabilities, sales and operating profit slightly increased thanks to strong sales in key product categories such as luxury goods and fashion."
The duty-free store reduced its annual deficit. Annual sales and operating profit for the duty-free store were 972.1 billion KRW and -28.8 billion KRW, respectively. Sales decreased by 2.6% compared to the previous year (997.8 billion KRW) due to poor performance at downtown stores, but operating profit increased by 2.5 billion KRW year-on-year, reflecting the effects of expanded airport store operations and MD restructuring.
Zinus recorded sales of 920.4 billion KRW and an operating loss of 5.3 billion KRW last year. Sales decreased by 3.3% year-on-year, and operating profit turned negative. Thanks to intensive business structure improvements such as inventory optimization and reduction of warehouses in the U.S., the fourth quarter saw sales of 289 billion KRW and operating profit of 16.1 billion KRW, representing increases of 2.4% and 852% year-on-year, respectively. However, more time is expected to be needed for overall performance improvement. A company representative stated, "Since May last year, Zinus has seen a turnaround starting in the third quarter due to normalized orders from major customers in the U.S. and efforts to improve business structure through inventory optimization and warehouse reduction, with both sales and operating profit increasing in the fourth quarter as well."
Meanwhile, as part of its value-up program, Hyundai Department Store announced a new mid- to long-term dividend policy from this year through 2027. Hyundai Department Store plans to implement an interim dividend of 10 billion KRW starting this year while continuously increasing year-end dividends. The year-end dividend per share last year was 1,400 KRW, up from 1,300 KRW the previous year. Additionally, the total dividend amount is planned to be raised to around 50 billion KRW by 2027 based on the dividend payment date.
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