GS Retail Q3 Operating Profit Down 12.8%... Operating Profit Declines for Second Consecutive Quarter

[Asia Economy Reporter Seungjin Lee] GS Retail's operating profit declined for the second consecutive quarter due to the novel coronavirus disease (COVID-19) and the longest rainy season in history.

GS Retail announced on the 27th that its operating profit for the third quarter of this year was 79 billion KRW, a 12.8% decrease compared to the same period last year. During the same period, sales amounted to 2.3488 trillion KRW, and net profit was 66.11 billion KRW, down 1.1% and 3.7% respectively from the third quarter of last year.

By business segment, convenience store GS25 recorded sales of 1.8786 trillion KRW in the third quarter, a 3.3% increase compared to the same period last year. However, operating profit decreased by 8.8 billion KRW (-9.8%) from the third quarter of last year to 81 billion KRW.

Sales of GS25’s ready-to-eat foods and cigarettes increased compared to the same period last year, but due to the long rainy season causing a decrease in foot traffic, sales of major summer products such as beverages and ice cream temporarily declined. Additionally, prolonged COVID-19 led to a failure in sales recovery in school and academy districts, resulting in a decrease in operating profit.

The supermarket business closed a total of 28 underperforming stores by the third quarter, recording sales of 329.4 billion KRW, a 15.4% decrease compared to the previous year. However, by closing underperforming stores and implementing a 'chain operation' system where the headquarters leads all authorities except sales activities, operating profit increased by 13 billion KRW compared to the same period last year, reaching 15.4 billion KRW.

Parnas Hotel, hit hard by COVID-19, saw both sales and operating profit sharply decline. Third-quarter sales decreased by 45.8% compared to the same period last year, recording 40.5 billion KRW. Operating profit during the same period turned to a loss of 1.8 billion KRW, a decrease of 16.1 billion KRW compared to the same period last year.

Parnas Hotel plans to stabilize the Grand Intercontinental Hotel, scheduled to reopen in December, ahead of schedule and proactively respond to changes in customers and the market caused by COVID-19.

A GS Retail official said, "Despite the national health crisis caused by the resurgence of COVID-19 in the third quarter, convenience store sales slightly increased year-on-year due to the expansion of various service platforms. However, due to the unprecedented long rainy season and the renovation of the Grand Intercontinental Seoul Parnas leading to a decline in hotel business profits, the company's overall operating profit slightly decreased compared to the previous year."

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