[Click eStock] "BGF Retail, Unavoidable Q1 Profitability Decline"

[Asia Economy Reporter Eunmo Koo] BGF Retail could not avoid a decline in profitability in the first quarter of this year. Although the existing store growth rate of convenience stores is expected to remain sluggish until April, it is analyzed that it may turn to a growth trend starting this month.

According to KB Securities on the 8th, BGF Retail's sales in the first quarter of this year amounted to 1.3931 trillion KRW, a 3% increase compared to the same period last year, while operating profit decreased by 30% to 18.5 billion KRW. Shin Ae Park, a researcher at KB Securities, explained in a report on the day, "The decline in operating profit is due to a sharp drop in sales at special stores and the deterioration of profits and losses at the subsidiary BGF Food."

Due to the decrease in the number of customers caused by the outbreak of the novel coronavirus infection (COVID-19), the existing store sales growth rate showed -2%. Researcher Park stated, "It is estimated that the sales decline was particularly large in special stores (accounting for 10% of the number of stores) such as schools, hospitals, and resorts," and added, "Operating profit in the convenience store sector decreased by 5.4 billion KRW compared to the same period last year, and it is estimated that 4.3 billion KRW of this decrease came from special stores."

In addition, an operating loss of 4.7 billion KRW occurred in other sectors outside convenience stores. Researcher Park analyzed, "This was due to a decrease in the production volume of ready-to-eat meals and the initial operating costs burden caused by the first operation of the 'Central Kitchen'." The net increase in stores was estimated at 240.

Sales in the second quarter are expected to grow by 4%, while operating profit is expected to decrease by 13%. Researcher Park forecasted, "It is estimated that existing store sales fell by about 7% due to the impact of COVID-19 until April, but starting from May, sequential school attendance began, and with the easing of social distancing and entry into the seasonal peak season, it will turn to a growth trend."

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