"Hotel Shilla Posts Consecutive Profit of 20.9 Billion KRW in Q3 Despite Off-Season for Duty-Free"
[Asia Economy Reporter Yuri Kim] Hotel Shilla announced on the 29th that its operating profit for the third quarter of this year reached 20.9 billion KRW, turning from a loss in the same period last year to a profit. Sales for the same period increased by 10.1% to 968.7 billion KRW. Net loss was 1.2 billion KRW, a decrease in loss compared to 28.9 billion KRW in the same period last year.
By segment, sales in the duty-free retail business (TR) segment rose 11% year-on-year to 857.6 billion KRW. Operating profit turned positive to 20 billion KRW. In the TR segment, domestic downtown store sales increased by 19% compared to the same period last year, while airport store sales decreased by 36% year-on-year due to the withdrawal from Incheon Airport Terminal 1 (T1) in February.
The Hotel & Leisure segment posted sales of 111.1 billion KRW, up 2% year-on-year. Operating profit also turned positive to 900 million KRW. Despite the ongoing impact of COVID-19, the recovery in domestic travel demand contributed to the turnaround to profitability.
However, compared to the second quarter, total sales increased by only 2%, and operating profit decreased by 55%. The significant decline in operating profit by 58% was largely due to increased marketing expenses in the TR segment, which faced a seasonal off-peak period. Cosmetics, the most popular item among Chinese "ttakgung" (daigou) shoppers, the major customers of duty-free shops, saw a reduction in product quantity and unit price during the summer, leading to a seasonal off-peak period for duty-free shops in the third quarter. The Hotel & Leisure segment slightly improved from a 700 million KRW loss in the previous quarter to a 900 million KRW profit in the third quarter.
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Hotel Shilla stated, "Despite the ongoing impact of COVID-19, sales slightly increased compared to the second quarter, and operating profit recorded a profit for the third consecutive quarter. Although marketing cost increases affected the third quarter, which is traditionally an off-peak season for the duty-free industry, sales grew year-on-year, showing signs of recovery."
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