Zinus Turns Profitable as Demand from U.S. Clients Rises
Duty-Free Stores Narrow Losses with Increased Luxury Sales
Four Group Affiliates Acquire Treasury Shares, Accelerating Value Enhancement
Hyundai Department Store saw a significant increase in profitability in the first quarter of this year, driven by a rebound in the performance of its subsidiaries, including Zinus, which operates its mattress business, and its duty-free store business.
On May 9, Hyundai Department Store announced in a regulatory filing that its consolidated operating profit for the first quarter of this year was provisionally tallied at 112.5 billion won, up 63.3% compared to the same period last year. Revenue increased by 15.4% to 1.0981 trillion won, while net profit rose by 24.8% to 88.3 billion won.
In detail, subsidiary Zinus recorded sales of 249.9 billion won, up 64.2% year-on-year, and turned to an operating profit of 27.5 billion won, compared to an operating loss of 19.1 billion won in the first quarter of last year. With expanded supply to major clients such as Amazon and Walmart, Zinus maintained a profit for the second consecutive quarter, following the fourth quarter of last year.
A Hyundai Department Store representative explained, "Zinus continued its strong performance due to increased mattress demand from major clients in the United States and other countries, as well as business structure reforms such as inventory optimization."
During the same period, duty-free store sales increased by 22.1% to 293.5 billion won, while operating losses were reduced from 5.1 billion won to 1.9 billion won. The rise in demand for overseas travel led to increased sales of luxury goods (such as watches and jewelry) at the Incheon International Airport branch, which drove revenue growth.
The department store division recorded sales of 589 billion won and operating profit of 97.2 billion won, down 0.8% and 5.7%, respectively, from the previous year. Despite the impact of the economic downturn, sales remained similar to last year as high-end categories like watches and jewelry continued to grow. However, increased costs, including depreciation expenses related to the renewal of the Jungdong branch and changes in rental fees for The Hyundai Seoul, led to a slight decrease in operating profit.
Meanwhile, four group affiliates, including Hyundai Department Store and Hyundai Green Food, decided to acquire an additional 30 billion won worth of treasury shares to enhance shareholder value. On this day, Hyundai Department Store announced it would acquire 339,433 treasury shares (1.5% stake) worth 21.1 billion won through market purchases. In addition, Hyundai Department Store revealed it would sell 881,352 shares (7.34% stake) of Hyundai Home Shopping, which it currently holds, to Hyundai GF Holdings. The per-share transaction price was set at 58,920 won, a 20% premium over the closing price of 49,100 won on the same day, in accordance with the market price regulations under the Corporate Tax Act. The total transaction amount is 51.9 billion won.
The funds needed for the treasury share acquisition are expected to be sourced from the cash inflow generated by the sale of Hyundai Home Shopping shares. The company also stated that any remaining funds would be used for additional treasury share purchases. A Hyundai Department Store representative explained, "With this Hyundai Home Shopping share transaction, Hyundai Department Store has resolved the issue of non-compliance with the holding company activity restrictions under the Fair Trade Act. As for Hyundai GF Holdings, the group's holding company, it will be able to further strengthen responsible management of Hyundai Home Shopping, a high-quality subsidiary, as the largest shareholder."
Previously, on May 8, Hyundai EZwell and Hyundai Green Food each announced they would acquire approximately 710,000 shares (3.0% stake) and 170,000 shares (0.5% stake) of their own stock, respectively. This is the first time Hyundai EZwell has acquired treasury shares since joining the Hyundai Department Store Group. On May 7, Hyundai Futurenet also decided to acquire about 1.1 million treasury shares (1.0% stake).
A Hyundai Department Store Group representative stated, "After completing the acquisition of treasury shares on the market, Hyundai Green Food plans to immediately retire the shares it has acquired and held since February. As for Hyundai Department Store, Hyundai EZwell, and Hyundai Futurenet, they will comprehensively consider future market conditions and proceed with treasury share retirement at an appropriate time."
The representative added, "The group's major listed companies are significantly undervalued compared to their intrinsic value, including market dominance, cash generation capability, and future growth potential in each business sector. We will continue to actively implement differentiated shareholder return policies to enhance corporate value going forward."
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