COVID-19 4th Wave... Another Blow to Distribution Stocks

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] As the fourth wave of COVID-19 intensifies with daily confirmed cases exceeding 1,000, distribution stocks are struggling.

According to the Korea Exchange on the 10th, Lotte Shopping's stock price fell more than 3% on the 9th, recording a one-month return of -13.60%. Hyundai Department Store also dropped 9.1% over the past month, and Shinsegae fell 9.95%.

These stocks, which mainly operate offline stores such as department stores and shopping malls, had rapidly recovered their stock prices at the end of last year with expectations of returning to daily life following the start of COVID-19 vaccinations. In the case of Lotte Shopping, the return from the beginning of this year to May was 18.54%, while Hyundai Department Store and Shinsegae recorded 34.24% and 30.39%, respectively.

Since non-face-to-face activities became routine due to the spread of COVID-19 last year, their performance was poor, so it was expected that this year would show significant improvement due to the base effect. In fact, Yuanta Securities forecasted on the 6th that Lotte Shopping's operating profit for the second quarter of this year would exceed market expectations (84 billion KRW) at 91.6 billion KRW, growing 6,490% year-on-year. Hyundai Department Store was also expected to increase by 559% year-on-year to 53.6 billion KRW, and Shinsegae was anticipated to turn a profit with an operating profit of 76.3 billion KRW.

However, as the COVID-19 Delta variant spreads and lockdowns are implemented in the metropolitan area, strengthening quarantine measures, concerns about the distribution sector's performance in the second half of the year appear to have been reflected in stock price declines.

The health authorities announced that the 'social distancing' level in the metropolitan area will be raised to the highest level, Level 4, for two weeks from the 12th to the 25th, and private gatherings of three or more people will be restricted after 6 p.m.

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