Divergent Stock Performance of 'Convenience Store Rivals'

BGF Retail Hits 23% Increase in One Month, Reaches New High
GS Retail's 10% Rise Limited Amid 'Namhyung Controversy'

[Asia Economy Reporter Song Hwajeong] Although convenience stores’ earnings are expected to improve from the second quarter, the stock price trends of BGF Retail and GS Retail are diverging. While BGF Retail recorded an all-time high as expectations for earnings improvement were fully reflected, GS Retail’s stock price has been sluggish recently due to various controversies.

As of 9:05 a.m. on the 4th, GS Retail was trading at 38,200 KRW, down 250 KRW (0.65%) from the previous day. It has continued a downward trend for four consecutive days. BGF Retail showed a 1.33% decline, returning to a downtrend after seven days, due to the burden from consecutive recent gains. Until the previous day, BGF Retail had risen for six consecutive days, reaching an intraday high of 189,000 KRW and setting a 52-week record high.

Looking at the stock prices over the past month, the difference between the two companies is clear. GS Retail’s stock price rose 10.01% over the past month, while BGF Retail’s increased by more than 23%. The reason for such a difference in stock prices between the two companies, despite the expected improvement in convenience stores’ second-quarter earnings, is interpreted as GS Retail’s misogyny controversy acting as a constraint on stock price growth. The misogyny controversy escalated into a boycott movement, and GS Retail recently disciplined those involved.

BGF Retail is expected to see a full-scale earnings turnaround starting from the second quarter. Suyeon Lim, a researcher at Hi Investment & Securities, said, “BGF Retail’s consolidated sales this year are estimated to increase by 8.5% year-on-year, and operating profit by 25%.” She added, “From the second quarter, as the seasonal peak season begins and offline activities increase, the convenience store industry is expected to improve, leading to an earnings turnaround.” Lim also noted, “Especially since the second quarter of last year was a period of significant profit impact due to COVID-19, there is a base effect, so high profit growth is expected.”

GS Retail is expected to benefit from synergies with GS Homeshopping, scheduled for July, but it is forecasted that it will take time for the synergies to materialize. Researcher Lim said, “The merger with GS Homeshopping can create synergies in logistics and product sourcing, which will positively affect fundamentals.” However, she added, “Specific synergy business plans have not yet been disclosed, and considering the investment amount and timeline, synergy creation will not be visible in the short term.”

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