Shinsegae Turns Profitable in Q3... Sales of 1.2144 Trillion KRW, Operating Profit of 25.1 Billion KRW

Department Store Operating Profit Doubles to 28.1 Billion KRW in Q2
Large Stores Including Gangnam Branch Drive Performance
Renewal Strengthens Core Department Store Competitiveness
SI and Central City Return to Profit
DF and Casamia Reduce Deficit Margin

[Asia Economy Reporter Seungjin Lee] Shinsegae succeeded in rebounding in the third quarter amid the impact of the novel coronavirus disease (COVID-19), turning profitable.

Shinsegae announced on the 12th that it recorded consolidated sales of 1.2144 trillion KRW and operating profit of 25.1 billion KRW in the third quarter. Sales increased by 19.7% compared to 1.0144 trillion KRW in the previous quarter (Q2), and operating profit turned positive with an increase of 68.2 billion KRW. Compared to the same period last year, sales decreased by 24.2% and operating profit by 73.8%.

Considering the continued impact of COVID-19 on the domestic distribution market and the difficulties in normal operations at duty-free shops such as Incheon Airport, this is a rapid recovery.

The department store division posted third-quarter sales of 363.8 billion KRW, down 5.5% year-on-year but up 2.8% quarter-on-quarter, entering a stable sales recovery phase. Operating profit was 28.1 billion KRW (down 44.6% year-on-year), about twice that of the previous quarter.

Shinsegae explained the rapid recovery in the department store division as a result of ▲leading performance of large stores based on the strategy of being the number one store in regions such as Gangnam Branch ▲strengthening offline department store core competitiveness through renovations of Times Square, Gangnam Branch, etc. ▲continuous retail innovation such as the industry's first permanent art sales and establishment of genre-specific VIP programs.

Improved performance of Shinsegae’s consolidated subsidiaries such as Shinsegae International, Shinsegae DF, Central City, and Casamia is also notable. Shinsegae International and Central City, which recorded losses last quarter due to COVID-19, significantly improved their results and returned to profitability, while duty-free shops and Casamia reduced their losses compared to the previous quarter, achieving performance improvement.

Shinsegae International recorded sales of 333.8 billion KRW (down 7.3% year-on-year) and operating profit of 7 billion KRW, achieving a rapid turnaround to profitability due to recovery in the duty-free cosmetics business and solid growth in the overseas fashion sector. In particular, the cosmetics business grew 52% quarter-on-quarter as Chinese consumption gradually normalized and duty-free sales showed a recovery trend.

Central City posted sales of 58.1 billion KRW and operating profit of 14 billion KRW, down 17.7% and 40.7% year-on-year respectively due to COVID-19. However, with gradual increases in hotel occupancy rates and recovery in leased store sales, both sales (52.8 billion KRW) and operating profit (-2.5 billion KRW) rose significantly quarter-on-quarter, turning profitable.

The duty-free shops improved their operating environment through rent reductions at Incheon Airport, domestic sales of duty-free goods, and third-party returns, resulting in sales of 437.2 billion KRW and operating loss of 20.5 billion KRW, significantly reducing the deficit compared to the previous quarter.

Additionally, domestic duty-free sales continue to rise due to events like Singles' Day and National Day demand, and the extended period for domestic sales of duty-free goods and third-party returns are being actively utilized to accelerate performance improvement in the fourth quarter.

Casamia, which is continuously expanding its distribution network, saw a 50% increase in sales year-on-year due to increased home-related consumption driven by the stay-at-home trend caused by COVID-19. Operating loss also decreased to 2 billion KRW, narrowing the deficit compared to the second quarter of this year, and is expected to turn profitable next year.

A Shinsegae official said, “In the third quarter of this year, rapid sales recovery in department stores, along with improved performance of consolidated subsidiaries such as Shinsegae International, DF, and Central City, led to a quick return to profitability. In the fourth quarter, we expect further improved results driven by significant department store sales growth, application of rent and operating rate at Incheon Airport duty-free shops, expansion of cosmetics and overseas fashion sales by Shinsegae International, and continuous growth of Casamia.”

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