[Click eStock] "Shinsegae, All Affiliates Show Performance Improvement"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained a 'Buy' rating and a target price of 400,000 KRW for Shinsegae on the 13th, expecting all affiliates to improve their performance.

Daishin Securities estimated Shinsegae's consolidated total sales and operating profit for the second quarter at 2.2179 trillion KRW and 77 billion KRW, respectively. Total sales are expected to increase by 28% year-on-year, and operating profit is anticipated to turn positive. The department store showed a very strong recovery, with same-store sales growth rising from about 5% in April to around 9% in May and June, averaging approximately 14% in the second quarter. Researcher Yoo Jeonghyun of Daishin Securities explained, "Luxury goods continue to drive growth, and high-margin apparel sales have also recovered, contributing to improved performance. However, home appliance sales declined in the second quarter due to many rainy days."

Shinsegae DF (duty-free shop) is estimated to have maintained a favorable situation, with daily sales exceeding 9 billion KRW at the Myeongdong branch in the second quarter. Although daily sales slightly decreased in May compared to April, this was attributed to restraint in commission competition and the transfer of inventory from the Gangnam branch to the Myeongdong branch in June, with daily sales expected to rise again from July. Researcher Yoo said, "Due to the reduced rent burden at Incheon Airport duty-free shop, operating profit for the duty-free shop in the second quarter is expected to be 22 billion KRW. Costs related to the closure of the Gangnam branch will be reflected as non-operating expenses of about 15 billion KRW."

Despite the impact of property tax reflected in the second quarter, Central City is expected to post solid results due to traffic recovery. Shinsegae International is also projected to turn profitable with an operating profit of about 16 billion KRW, driven by strong sales of overseas fashion and imported cosmetics compared to the same period last year.

Researcher Yoo stated, "Although department stores will be temporarily affected by the Delta variant in the third quarter, if the increase in confirmed cases subsides, consumption recovery and the momentum from the opening of the Daejeon branch at the end of August will be highlighted again. Shinsegae's competitiveness lies in its possession of both domestic and international consumption portfolios, including department stores and duty-free shops."

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