"Last Year's Surprise Performance Base Effect, Convenience Stores Hold Up Well" GS Retail Q1 Operating Profit 37.5 Billion KRW... Down 57.7% (Comprehensive)

[Asia Economy Reporter Yuri Kim] GS Retail announced on the 26th that its operating profit for the first quarter of this year was 37.5 billion KRW, a 57.7% decrease compared to the same period last year. Although this figure is lower than the financial investment industry's consensus estimate of 41.5 billion KRW, the company explained that excluding one-time income from the previous year, the results are similar to last year's level. During the same period, sales amounted to 2.1001 trillion KRW, down 1.9%, and net profit was 34.3 billion KRW, a 30.6% decrease.

The core convenience store business performed well. First-quarter convenience store sales reached 1.6479 trillion KRW, a 2.8% increase compared to 1.6028 trillion KRW in the same period last year. GS Retail stated, "The net increase in GS25 stores proceeded smoothly at the target level," and added, "Despite the prolonged COVID-19 situation, sales in the beverage and ready-to-eat food categories grew." Sales in the new growth categories, including refrigerated, frozen, and ready-to-eat foods, increased by 6%. However, non-food items saw a 16% decline.

Operating profit also rose by 3.0% to 41.8 billion KRW compared to 40.6 billion KRW in the same period last year, influenced by increased sales of alcoholic beverages and drinks. GS Retail forecasted, "With rising temperatures leading to more outdoor activities and the end of remote work, sales in residential, office, and young power commercial districts will gradually recover."

GS Retail plans to develop various strategic category products and brand collaboration products to boost sales during peak seasons. The company said, "We are conducting various tests to create synergy with GS Home Shopping to revitalize our online and offline platform business," adding, "Through this, we will quickly respond to changing consumer trends."

Meanwhile, the supermarket and hotel businesses showed poor performance. First-quarter supermarket sales were 295.8 billion KRW, a 13.5% decrease compared to the same period last year. GS Retail explained this was due to the closure of 20 underperforming branches last year. Operating profit fell 32.3% to 11.1 billion KRW. GS Retail noted, "During the chain operation process led by headquarters in ordering, price management, and inventory control, some customers shifted online," and added, "We will enhance the completeness of headquarters-centered chain operations and establish a stable profit structure through franchise business expansion."

The hotel business continued to be affected by COVID-19. Parnas Hotel sales were 45.2 billion KRW, down 0.2% from the same period last year. Due to the prolonged pandemic, the occupancy rate of the Grand Intercontinental Hotel remained at around 25%. The COEX Hotel also recorded only 31.3%. However, Nine Tree Hotel improved by 6.2 percentage points compared to the same period last year, reaching 45.8%. Operating profit turned positive at 100 million KRW. The company stated, "Operating profit improved by about 800 million KRW compared to the same period last year due to operational efficiencies such as reduced food and banquet operation hours and workforce reallocation."

The development business recorded sales of 13.8 billion KRW and operating profit of 6.7 billion KRW in the first quarter. Last year, one-time income led to surprise results with sales of 57.9 billion KRW and operating profit of 49.1 billion KRW during the same period, but this year, due to the base effect, sales and operating profit decreased by 76.2% and 86.4%, respectively. The common and other sectors, including e-commerce, health & beauty (H&B), and subsidiaries, recorded sales of 94.7 billion KRW, a 4.3% increase, but operating losses widened by about 5.6 billion KRW to 22.2 billion KRW. This was analyzed to be influenced by the reduction in the number of H&B Lalavla stores from about 130 in the second half of last year to just over 110 early this year.

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