[Click eStock] "Hyundai Department Store Enters Stable Phase... Luxury & Living Soaring"

Despite the Impact of COVID-19, Effects Smaller Than First Wave
Fashion Sector Slumps but Luxury and Living See Double-Digit Growth
Namyangju Premium Outlet Expected to Achieve Profit in First Half of Year

[Asia Economy Reporter Minwoo Lee] The sales decline at Hyundai Department Store is stabilizing. Although sales in the fashion sector have decreased, luxury goods and living categories continue to achieve double-digit growth. Performance is expected to gradually improve starting this year.

On the 8th, Ebest Investment & Securities raised Hyundai Department Store's target stock price by 14.5% to 95,000 KRW, citing these factors. The closing price the previous day was 74,700 KRW. The investment opinion was maintained as 'Buy.' Analyst Orina from Ebest Investment & Securities explained, "The department store segment benefits from new store openings and the pent-up effect (rapid recovery of suppressed demand)," adding, "The duty-free shop has established a favorable operating environment to respond to its main customers, Chinese 'ttaigong' (individual traders)."

Ebest Investment & Securities estimated that Hyundai Department Store would record consolidated net sales (excluding tenant sales but including tenant commissions) of 725.5 billion KRW and operating profit of 67.9 billion KRW in Q4 last year. Net sales increased by 18.5% year-on-year, while operating profit decreased by 35.9%. This was said to be in line with market expectations.

Net sales in the department store segment were projected to decline by 6.7% year-on-year to 491.4 billion KRW. Same-store sales growth rates were expected to be 5% in October and -4% in November. December is presumed to have been weak due to the social distancing level being raised to 2.5. Analyst Oh noted, "During the first wave of COVID-19, sales dropped by 30%, but during the second wave, the decline was limited to 15-20%, indicating that the sales decrease has stabilized compared to the initial period," adding, "Although the decline in the fashion sector, which showed signs of recovery in October, is regrettable, luxury goods and living categories continue to maintain double-digit growth." Therefore, annual net sales in the department store segment are expected to increase by 12.0% year-on-year to approximately 1.9468 trillion KRW this year.

Meanwhile, the Namyangju Premium Outlet, which opened in November last year, is expected to surpass the break-even point in the first half of this year. Park One, scheduled to open next month, is anticipated to generate sales in the low 50 billion KRW range.

The duty-free segment is estimated to maintain stable daily sales of 5 to 6 billion KRW. Sales in Q4 last year were projected at 258.1 billion KRW, with an operating loss of 10.7 billion KRW. Compared to the same period last year, sales increased by 125%, and the operating loss decreased by approximately 24.2%.

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