Hyundai Department Store Expects Benefits from New Duty-Free Store Openings This Year and Department Store Expansions in 2021
[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities analyzed that the current stock price of Hyundai Department Store is in the realm of absolute undervaluation, and that the investment attractiveness is high as the effect of new duty-free store openings this year and the effect of department store openings in 2021 will continue.
Hyundai Department Store's consolidated net sales for Q4 last year were 612.5 billion KRW, and operating profit was 105.7 billion KRW, increasing by 15% and 7% respectively compared to the previous year, expected to meet market expectations. Thanks to strong sales of global luxury brands, the existing store growth rate of department stores in Q4 recorded 1.7%. The duty-free store segment is estimated to have total sales of 236.1 billion KRW and an operating loss of 15.3 billion KRW.
This year, the momentum is expected to continue with the effect of new duty-free store openings (Dongdaemun store scheduled to open in February), and in 2021, the effect of department store openings (Yeouido store scheduled to open in January).
Researcher Lee Ji-young said, "In 2020, the improvement in duty-free store performance will undoubtedly stand out," adding, "Duty-free segment sales are expected to increase by 135% year-on-year to 1.9 trillion KRW, and the operating loss is expected to improve by 44.1 billion KRW to 31.3 billion KRW."
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She continued, "Gangnam store is expected to have sales of 1 trillion KRW and an operating loss of 21.3 billion KRW, and with increased store competitiveness and achievement of economies of scale, breakeven is expected within the second half of the year." She also explained, "Dongdaemun store is estimated to have sales of 900 billion KRW and an operating loss of 10 billion KRW; even when the previous operator managed it, sales were 800 billion KRW and at breakeven level," adding, "Although rent increased by 10 billion KRW due to the change of operator, it can be sufficiently offset by labor efficiency and economies of scale."
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