[Click eStock] "Shinsegae to Recover Rapidly After COVID-19"

Eugene Investment & Securities Recommends 'Buy' with Target Price of 340,000 Won... Closing Price on 11th at 251,000 Won

Shinsegae Department Store Yeongdeungpo Branch (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] Shinsegae is expected to face a difficult first quarter but is projected to be the fastest to recover after the COVID-19 pandemic.

According to Eugene Investment & Securities on the 12th, Shinsegae's sales and operating profit for the first quarter of this year are estimated to decrease by 20% and 58.7%, respectively, compared to the previous year. This is because both department stores and duty-free shops are inevitably experiencing sluggish sales due to COVID-19.

Department stores are expected to see a same-store sales decline of about 10%. January showed a positive trend with a 7% increase, but February saw a 12% decrease due to some store closures and reduced visitor numbers.

Duty-free shops have also seen sales drop by about 40% since the COVID-19 outbreak. Researcher Joo Young-hoon of Eugene Investment & Securities explained, "However, since impairment losses on right-of-use assets (312 billion KRW) were recognized last year, quarterly depreciation expenses have decreased by about 15 billion KRW, so the scale of operating losses is expected to be smaller than initially feared."

Excluding COVID-19, competitiveness remains intact. Once the situation eases, sales are expected to recover at the fastest pace. Researcher Joo said, "The luxury category in department stores confirmed growth of over 10% even last month, and considering the temporary expansion of income deduction rates for credit and debit card usage, recovery in clothing and accessories sectors is expected after April. Regarding duty-free shops, given their overwhelming performance before COVID-19, there is sufficient pent-up demand for purchases," adding, "In fact, since the fastest recovery is expected after the COVID-19 situation improves, it is a time to consider a buying strategy when stock prices adjust."

Eugene Investment & Securities set a target price of 340,000 KRW for Shinsegae. The closing price on the 11th was 251,000 KRW.

This content was produced with the assistance of AI translation services.