[Click eStock] "Hyundai Department Store: Last Q4 Department Store Impacted by COVID-19... Duty-Free Shop Shows Relative Outperformance"

[Asia Economy Reporter Koo Eun-mo] Hi Investment & Securities evaluated that while Hyundai Department Store's department stores were affected by the novel coronavirus infection (COVID-19), its duty-free shops performed relatively well in the fourth quarter of last year.

Hi Investment & Securities forecasted that Hyundai Department Store's sales in the fourth quarter of last year reached 746.8 billion KRW, a 21.9% increase compared to the same period last year, but operating profit decreased by 34.9% to 68.8 billion KRW, falling short of market expectations. On the 6th, researcher Ha Jun-young of Hi Investment & Securities explained in a report, "COVID-19 rapidly spread from the end of November last year, leading to a decline in consumers' visits to multi-use facilities," adding, "Especially from December 8 last year, the social distancing level in the metropolitan area was raised to level 2.5, and special year-end and New Year quarantine measures were consecutively implemented, resulting in a negative same-store sales growth rate in December."

First, department stores were estimated to have a sales growth rate that decreased by 7.0% compared to the same period last year. Although they performed well from October to mid-November, sales contracted from the end of November due to the rapid resurgence of COVID-19. Researcher Ha added, "The Namyangju Outlet, which opened in November last year, initially exceeded its sales targets but was affected by the raised social distancing level in December."

On the other hand, duty-free shops were estimated to have recorded sales similar to those in the third quarter. Since most of the current sales come from "ttaigong" (individual shoppers who buy goods abroad), the impact of the COVID-19 resurgence was minimal. Researcher Ha explained, "In the case of Hyundai Department Store, there was almost no sales through third-party returns of duty-free goods last year, so the impact of the termination of the third-party return system for duty-free goods will be minimal."

This year, external growth is expected to continue through new store openings. Researcher Ha said, "The Hyundai Department Store Park One branch is scheduled to open in Yeouido next month, and sales growth is expected to reach 11.4% year-on-year as the sales from the Daejeon Premium Outlet, which opened in June last year, and the Namyangju Premium Outlet, which opened in November, are fully reflected," adding, "If COVID-19 vaccine distribution accelerates in the second half of the year, further external growth is possible due to improved consumer sentiment." Additionally, duty-free shop sales are expected to increase significantly from the second half of the year. With vaccine distribution, Korea-China flights are expected to increase from the second half, making it easier for ttaigong to enter the country.

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