Department Store Stocks Preparing for 'With Corona' Era

Related Stocks' Prices Gradually Rebound
Q4 Consumer Sentiment Contraction Poses Burden

[Asia Economy Reporter Gong Byung-sun] Although the number of COVID-19 confirmed cases is not decreasing, stocks related to department stores are preparing for With COVID, which signifies a phased return to normal life. However, the prolonged spread of COVID-19, longer than expected, is somewhat a burden on consumer sentiment, which is shrinking.

As of 9:52 a.m. on the 7th, Shinsegae recorded 259,500 KRW, up 0.58% (1,500 KRW) compared to the previous day. Although it was somewhat sluggish with a 2.09% drop the previous day, it is rebounding along with the KOSPI. Other department store-related stocks are also on the rise. At the same time, Lotte Shopping, which operates Lotte Department Store, and Hyundai Department Store rose 0.49% and 0.25%, respectively, compared to the previous day.

This continues the stock price trend from the 5th. On the 5th, the KOSPI fell 1.89%, breaking below the 3,000 mark. The market atmosphere was depressed to the extent that large-cap stocks such as Samsung Electronics and SK Hynix also struggled. However, on the same day, Shinsegae, Lotte Shopping, and Hyundai Department Store rose 3.54%, 1.99%, and 4.87%, respectively, showing a trend opposite to the overall market.

Although the spread of COVID-19 is not easily controlled, investors in department store-related stocks seem to be paying more attention to With COVID. They respond more to the With COVID plan than to the four-digit number of confirmed COVID-19 cases. On the 6th, Kwon Deok-cheol, Minister of Health and Welfare, said at the National Assembly Health and Welfare Committee’s audit, “If vaccination rates of 90% for the elderly and over 80% for adults are achieved, phased daily recovery can begin,” adding, “The timing is expected to be around late October or early November.”

Department stores have made aggressive investments in preparation for With COVID. Shinsegae Department Store opened a branch in Daejeon for the first time in five years, and Lotte Shopping, which had closed three out of five warehouse-type stores in the metropolitan area, opened Lotte Department Store Dongtan branch in August. Hyundai Department Store also opened The Hyundai Seoul, the largest department store in Seoul, in February.

However, shrinking consumer sentiment is a burden for department store stocks. According to the Korea Chamber of Commerce and Industry, the retail distribution industry business outlook index for the fourth quarter of this year was 99, falling below the baseline of 100. It recorded 103 and 106 in the second and third quarters, respectively, but the upward trend has been broken. The department store sector’s business outlook index for the fourth quarter also recorded 98, failing to exceed the baseline. Hwang Se-woon, a research fellow at the Korea Capital Market Institute, explained, “The transition to the With COVID system is not completely decided, so uncertainty remains,” but added, “If With COVID is fully implemented, the previously contracted consumer sentiment could be revived.”

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