Q3 Earnings Diverge in Retail... Large Marts Smile While Department Stores Cry

Increase in Sales of Food Products and Chuseok Peak Season

[Asia Economy Reporter Cha Min-young] In the third quarter of this year, the retail sector saw contrasting results between large discount stores and department store divisions. Large discount stores recorded better-than-expected performance thanks to strong sales of gift sets and groceries during the Chuseok holiday peak season, while department stores showed somewhat sluggish trends.

According to the industry on the 13th, Lotte Shopping, which operates large discount stores, department stores, and home shopping businesses, posted an operating profit of 111.1 billion KRW in the third quarter, a 26.8% increase compared to the same period last year, and turned a net profit of 3 billion KRW. Sales amounted to 4.1059 trillion KRW, down 6.8% year-on-year. Among these, existing store sales at discount stores reached 1.595 trillion KRW, and operating profit grew by 160.5% year-on-year due to restructuring of underperforming stores. Increased demand for home appliances and health products drove the performance of electronics specialty stores and home shopping, leading the overall company results. On the other hand, department stores recorded sales of 619 billion KRW and operating profit of 78 billion KRW, down 15.5% and 25.2% respectively compared to the same period last year.

Shinsegae Group’s large discount store, E-mart, also posted consolidated sales of 5.9077 trillion KRW and operating profit of 151.2 billion KRW in the third quarter this year, up 16.7% and 30.1% respectively from the same period last year. Although it recorded an operating loss in the second quarter, seemingly returning to the red after a year, it turned profitable again in just one quarter. On a separate basis, total sales increased by 7.5% year-on-year to 4.2069 trillion KRW, and operating profit rose by 14 billion KRW to 140.1 billion KRW.

Shinsegae, which focuses on department stores, saw its consolidated operating profit in the third quarter drop 73.8% year-on-year to 25.1 billion KRW, while sales fell 24.2% to 1.2144 trillion KRW. While the department store segment showed signs of recovery, the duty-free business reduced its losses compared to the previous quarter. The duty-free stores posted an operating loss of 20.5 billion KRW, significantly narrowing the deficit due to improved business conditions such as rent reductions at Incheon International Airport, domestic sales of duty-free goods, and approval for third-party returns.

Hyundai Department Store Group saw its scale expand with the inclusion of new duty-free store sales, but profitability deteriorated. Operating profit in the third quarter was 44.7 billion KRW, down 26.5% year-on-year, and net profit also decreased by 28% to 37.5 billion KRW. Sales rose 24.5% to 662.3 billion KRW compared to the previous year. Department store sales were strong due to consumer recovery following the easing of social distancing measures and the opening of the 'Hyundai Premium Outlet Daejeon Branch' in June. Duty-free sales also increased due to new store openings at Dongdaemun and Incheon Airport locations.

Reporter Cha Min-young blooming@

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