[Special Stock] GS Retail Weakens on Q1 Earnings Disappointment... New Low

GS Retail continued its decline for the fifth consecutive day, hitting a 52-week low during trading.

As of 9:49 AM on the 2nd, GS Retail was trading at 13,730 KRW on the Korea Exchange, down 260 KRW (1.86%) from the previous day. During the session, the price dropped to 13,720 KRW, breaking the 52-week low.

The weak first-quarter earnings outlook is believed to have negatively impacted the stock price. On the same day, DB Financial Investment forecasted that GS Retail's consolidated sales for the first quarter would decrease by 1.2% year-on-year to 2.7759 trillion KRW, and operating profit would fall 38.3% to 45.6 billion KRW, below market expectations of 50 billion KRW. Huh Jena, a researcher at DB Financial Investment, explained, "It is estimated that both the convenience store and supermarket divisions recorded poor same-store sales growth in the first quarter," adding, "The convenience store division maintained sales at the previous year's level, but the pace of net new store openings was slower than expected." She continued, "Although store openings are proceeding as planned, fixed cost burdens are increasing, and since both the convenience store and supermarket divisions share common expenses, a decline in profitability compared to the same period last year is inevitable."

Concerns over earnings slowdown are expected to persist for the time being. Researcher Huh stated, "With continued poor performance centered on the distribution division, GS Retail's stock price momentum has entered a hiatus," and added, "As the growth rate of the convenience store industry slows, combined with the slowdown in growth of the supermarket division, which had been the focus of GS Retail's unique earnings momentum, concerns over earnings deceleration will continue for the foreseeable future."