Hyundai Department Store Group Reports 84% Drop in Operating Profit Due to Weak Department Store Performance in Q2

COVID Shock... Department Store Slump

[Asia Economy Reporter Cha Min-young] Hyundai Department Store Group posted sluggish results in the second quarter due to the impact of the novel coronavirus disease (COVID-19).

Hyundai Department Store announced on the 13th that its consolidated operating profit (provisional) for the second quarter was 8.1 billion KRW, down 84% compared to the same period last year. During the same period, sales decreased by 3.1% to 516.6 billion KRW, and net profit also fell by 69.3% to 14.7 billion KRW, according to provisional estimates.

By business division, department store sales amounted to 424.5 billion KRW, down 10.3%, and operating profit plunged 62.5% to 26.2 billion KRW. Although customer traffic was sluggish in April and May due to COVID-19, there was a slight rebound in June thanks to the opening of the new Hyundai Premium Outlet Daejeon branch and the recovery in consumption. Operating profit decreased due to increased fixed cost burdens from the sales decline, as well as the impact of property tax and comprehensive real estate tax.

The duty-free store division experienced sluggish customer traffic due to COVID-19, but the opening of the new Dongdaemun branch led to a slight improvement in sales and operating performance compared to the previous year. Sales increased by 37.3% year-on-year to 117.2 billion KRW, and operating loss improved by 1.4 billion KRW to 18.4 billion KRW from a loss of 19.4 billion KRW the previous year.

A Hyundai Department Store official said, "The overall operating environment deteriorated due to COVID-19, resulting in decreased sales in the department store division and increased fixed cost burdens, which led to a decline in operating profit. The duty-free store division saw increased sales and reduced losses due to the opening of new stores."

He added, "Department store sales have shown a rapid recovery since June, and improved performance is expected in the third quarter due to the opening of new outlets and the launch of a food specialty mall."

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