Shinsegae, Key Points to Watch in Q4 Earnings

[Asia Economy Reporter Song Hwajeong] Although Shinsegae recorded sluggish performance in the third quarter of this year, it is expected that performance improvement will be possible in the fourth quarter. The key points to watch for Shinsegae's performance in the fourth quarter are department store recovery, duty-free shop turning a profit, and subsidiary profit contributions.

According to the Financial Supervisory Service's electronic disclosure system on the 14th, Shinsegae recorded sales of 1.2144 trillion KRW and operating profit of 25.1 billion KRW in the third quarter of this year. This represents a decrease of 24.2% and 73.8%, respectively, compared to the same period last year. Na Eunchae, a researcher at Korea Investment & Securities, analyzed, "Shinsegae's third-quarter operating profit fell short of consensus by 17%, but it turned to profit compared to the previous quarter. Department store total sales decreased by 3.4% compared to the same period last year, and duty-free shop sales decreased by 44%. Downtown duty-free shop sales decreased by only 25%, but airport sales plummeted by 89%." In addition, Shinsegae International, Central City, and Dongdaegu all recorded negative growth, while among subsidiaries, Casamia's sales increased by 50%, showing high growth.

From the fourth quarter, performance improvement is expected. Researcher Na said, "The third-quarter performance seems to have little significance as the impact of COVID-19 continued. In the fourth quarter, profits are expected to recover to last year's level, and a significant performance improvement is anticipated next year." Since October, total department store sales have increased by 10%, and from the fourth quarter, thanks to rent reductions at airport duty-free shops, a turnaround to profitability is expected. Also, profit contributions from subsidiaries such as Shinsegae International and Central City are expected to increase.

Korea Investment & Securities forecasted Shinsegae's fourth-quarter operating profit at 128 billion KRW. Researcher Na explained, "This represents a 34% decrease compared to the same period last year, but if last year's one-time gains are excluded, it only decreases by 7%, recovering profits to last year's level."

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