Emart Reports Q2 Operating Loss of 47.4 Billion KRW, Deficit Widens... Sales Up 13.2% YoY

Operating Losses Due to COVID-19 Challenges... Deficit Widens
Sales Maintain 50 Trillion Won Range... Up 13.2% Year-on-Year

Consistent Improvement in Discount Store Performance
Specialty Store Deficit Improved by 12.3 Billion Won Through Efficiency
SSG.com Grows Over 40% for Second Consecutive Quarter

[Asia Economy Reporter Seungjin Lee] Emart recorded an operating loss in the second quarter due to the impact of the novel coronavirus disease (COVID-19) and restrictions on the use of disaster relief funds. However, despite various adverse factors, sales remained in the 5 trillion won range, raising expectations for improved performance in the third quarter.

Emart announced on the 13th that its consolidated sales for the second quarter of this year reached 5.188 trillion won, an increase of 13.2% compared to the same period last year.

Consolidated operating profit recorded a loss of 47.4 billion won, with the deficit widening by 17.5 billion won compared to the same period last year. This was influenced by poor sales at discount stores in May due to restrictions on the use of disaster relief funds and poor performance of consolidated subsidiaries caused by COVID-19.

However, thanks to gains from the sale of the Magok site and reduced interest expenses, pre-tax profit turned positive at 520.4 billion won, an increase of 558.5 billion won compared to the same period last year, and net profit also turned positive, rising by 341.1 billion won to 314.5 billion won.

On a separate basis, total sales were 3.5538 trillion won, with an operating loss of 15 billion won.

Emart discount stores’ performance has been steadily improving. The same-store sales growth rate for discount stores improved from -3.4% in 2019 to -2.4% in the first quarter, and further improved to -1.2% in the second quarter.

This is analyzed as the gradual success of Emart’s strategy to strengthen existing store competitiveness through grocery enhancement and customer-centered store expansion, which has been implemented since last year.

For example, Emart Wolgye Branch, newly launched as a customer-centered store in May, recorded a strong performance with monthly sales increasing by more than 50% compared to the previous year after renewal.

Traders has been steadily achieving external growth. Traders’ sales increased by 18.6% year-on-year, continuing double-digit growth for the second consecutive quarter, and operating profit also increased by 800 million won (5.5%) year-on-year, showing a continuous upward trend.

Emart expects growth to accelerate further as seven additional Traders stores open by 2023, starting with the opening of the Traders Anseong Branch in the second half of the year.

The most notable point in the second quarter’s performance is the significant improvement in specialty store profitability through selection and concentration. Emart has improved efficiency by closing seven Pierrot Shopping stores, modeled after Japan’s Don Quijote, sequentially this year, exiting inefficient specialty stores.

Specialty stores, which recorded a loss of 19.2 billion won in the second quarter last year, recorded a loss of 6.9 billion won in the second quarter this year, reducing the deficit by 12.3 billion won. In particular, No Brand specialty stores achieved their first operating profit of 2.5 billion won in the first quarter and further expanded profitability with 5.5 billion won in operating profit in the second quarter.

Emart’s consolidated subsidiaries such as SSG.com, Emart Everyday, and Shinsegae TV Shopping have also achieved continuous growth and profit improvement following the first quarter.

SSG.com recorded total sales of 931.7 billion won in the second quarter, growing 42% year-on-year, maintaining a growth rate of over 40% for two consecutive quarters. This far exceeds the overall online market growth rate of 15% in the second quarter.

In particular, although operating loss was 13.7 billion won, the deficit narrowed by 6 billion won compared to the first quarter, showing steady profit improvement along with external growth.

Emart Everyday also achieved stable profits with operating profit increasing by 1.7 billion won year-on-year to 6.2 billion won. Shinsegae TV Shopping recorded operating profit of 5.9 billion won, continuing a three-quarter consecutive profit streak and aiming for its first annual profit turnaround.

Shinsegae Food, which recorded an operating loss of 4 billion won in the first quarter, succeeded in turning a profit with operating profit of 2.4 billion won in the second quarter due to improved profitability in the school meal sector as some schools reopened. Shinsegae Property recorded a loss of 8.5 billion won due to the impact of COVID-19 and other factors, turning to a deficit compared to the previous year.

An Emart official said, “Despite the continued difficult environment such as COVID-19, we recorded a half-year profit,” adding, “In the second half, we will further strengthen our core business competitiveness through grocery differentiation, non-food efficiency, and expansion of customer-centered stores.”

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