Short-term Price Correction Expected in Retail Sector... Buying Opportunity for Shinsegae

On July 31, Korea Investment & Securities stated that a short-term price correction may continue in the retail sector, and recommended using this as a buying opportunity for Shinsegae.

Kim Myungjoo, a researcher at Korea Investment & Securities, maintained an "overweight" view on the retail sector in the report "Retail - Major Retailers' Sales Trends in June 2025" published on this day, and made these comments.

Sales data for major retailers in June, released the previous day, showed a 7.3% increase compared to the previous month. While offline sales decreased by 1.1%, online sales increased by 15.9%. Kim explained, "Recently, due to sector rotation in the market, the stock prices of traditional retail sector companies, except for Hotel Shilla, have been sluggish." He added, "As the retail sector's second quarter performance has also been lackluster, it is estimated that there is continued demand for profit-taking."

He also stated, "Considering the low base and the government's supplementary budget, the retail environment in the second half of this year is likely to be better than in the first half, and therefore, retail companies' performance is also highly likely to improve compared to the first half." He added, "It is positive that the number of marriages and births in May continued to rebound."

Accordingly, Kim judged that a short-term price correction in the retail sector may continue. He analyzed, "We recommend using the price correction as a buying opportunity for Shinsegae," and added, "The holding strategy for Emart remains valid."

By channel, he expected a significant rebound in discount stores in July. Although hypermarkets are not eligible for the government’s livelihood support funds, it is expected that increased household purchasing power will also lead to favorable results for hypermarkets in July. Previously, in June, discount store sales and the number of purchases decreased by 2.8% and 3.8%, respectively, falling short of market expectations. Department stores, which showed sales in line with market expectations last month, are "expected to perform well in the second half" due to favorable supply-demand factors.

In the case of convenience stores, both sales (-0.7%) and the number of purchases (-3.2%) decreased in June due to the heat wave. Considering the unfavorable weather and a decrease in the number of stores, it is expected that the market share of the convenience store channel within the retail industry will continue to decline in the second quarter, following the first quarter.