[Click eStock] "Rapid Industry Improvement Drives Hyundai Department Store 1Q Operating Profit to 54.3 Billion KRW... Up 264% YoY"

Surge in Department Store and Duty-Free Shop Sales Driven by Pent-Up Consumer Demand and New Store Openings
Improvement May Outpace Expectations... Annual Total Sales Expected to Surpass 8 Trillion Won

On the last day of the holiday, the 1st, citizens visiting The Hyundai Seoul in Yeouido, Seoul, are enjoying shopping. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Minwoo Lee] As the distribution of COVID-19 vaccines expands, the department store industry is improving faster than expected. With last year's low base effect and a reduction in duty-free store deficits, Hyundai Department Store is expected to grow significantly this year.

On the 10th, Hyundai Motor Securities forecast that Hyundai Department Store will record consolidated total sales of 1.788 trillion KRW and operating profit of 54.3 billion KRW in the first quarter of this year. Compared to the first quarter of last year, sales are expected to increase by 29.2% and operating profit by 264.3%. This is anticipated to be a favorable performance that compensates for last year's sluggishness.

First, with the improvement in the department store industry, sales at the Yeouido branch (The Hyundai Seoul) are expected to increase by about 6.9% compared to the same period last year. The growth in duty-free store sales is even steeper. Thanks to the addition of new stores such as Dongdaemun and Incheon Airport branches, sales are expected to increase by 190.7% compared to the first quarter of last year.

Operating profit is expected to increase even more significantly. This is because the department stores have improved their sales gross profit margin and reduced fixed cost burdens due to scale expansion, and the deficit at duty-free stores is also expected to shrink.

Strong performance growth is expected to continue throughout this year. This is due to the combined effect of new store sales contributions from department stores and duty-free stores, along with the positive spillover from industry improvement. The department store segment opened Hyundai Premium Outlet in June last year and the Yeouido branch in February this year. The duty-free stores opened the Dongdaemun and Incheon Airport branches in the second half of last year.

Accordingly, Hyundai Motor Securities expects Hyundai Department Store to achieve consolidated sales of 8.0129 trillion KRW and operating profit of 293.4 billion KRW this year. Sales are estimated to increase by 17.3% and operating profit by 115.8% compared to the same period last year. The target stock price was also raised by 23% to 123,000 KRW. The closing price the previous day was 89,100 KRW. The investment opinion 'Buy' was maintained. Researcher Jongryeol Park of Hyundai Motor Securities explained, "Although COVID-19 continues, the department store industry is rapidly improving, which is a phenomenon of pent-up consumption being released and is expected to continue for some time. Vaccination is also progressing smoothly, so there is a possibility that the recovery speed will accelerate further in the second half of the year."

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