[Click eStock] 'Revenge Spending' Ignites... "Hansome, Bright Signal for Earnings Improvement"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment has raised the target stock price of fashion company Hansome to 46,000 KRW, forecasting an improvement in performance due to increased consumption suppressed by COVID-19.

Hansome's sales in January showed a mid-single-digit negative growth but turned to an increasing trend from February onwards. This is similar to the rebound in the same-store sales growth rate of department stores, one of the major sales channels. In particular, March is expected to benefit from the low base effect of the same month last year. Sales in March last year decreased by more than 20% compared to the previous year due to the spread of COVID-19, which began to be reflected in mid-February, and the avoidance of offline shopping. The company's March sales growth rate is estimated to be in the mid-to-high 20% range.

Operating profit is also expected to increase by 18.4% year-on-year due to the growth of online sales and cost ratio improvement from the normalization of offline sales. Annual sales and operating profit are forecasted to increase by 6.6% and 21.5% to 1,274.6 billion KRW and 124 billion KRW, respectively.

Last year's operating profit margin maintained the 2019 level despite sluggish sales caused by COVID-19. This was due to margin defense from the expansion of online channels, which have a margin rate more than 20 percentage points higher than offline channels. The online growth trend is expected to continue this year as well. Park Hee-jin, Deputy General Manager and Research Fellow at Shinhan Financial Investment, said, "We believe there is sufficient stock price momentum from the recovery of offline growth, continued online growth, and margin improvement," adding, "While confirmation of monthly closing figures is necessary, considering the double-digit base effect expected to continue until April and the repeated impact of social distancing last year, there is no concern about performance improvement throughout the year."

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