[Click eStock] "Shinsegae, Expected Record High Earnings with With-Corona"

Consensus-Aligned Q3 Earnings This Year
Kiwoom Securities "Maintains Shinsegae Target Price at 440,000 Won"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Shinsegae posted third-quarter results this year that met market consensus, driven by strong sales in luxury goods and apparel. It is expected to achieve record-high performance in the fourth quarter of this year as well, along with the gradual return to normal life under With Corona.

According to Kiwoom Securities on the 10th, Shinsegae's third-quarter sales this year increased by 37.28% year-on-year to KRW 1.6671 trillion, and operating profit rose by 307.07% during the same period to KRW 102.4 billion. Sales exceeded consensus by 15.26%, while operating profit fell short by 2.51%.

The department store segment grew due to strong performance in luxury goods and apparel. Same-store sales at department stores in the third quarter showed a mid-10% growth rate compared to the same period last year. In addition, sales across all segments grew rapidly, generating an operating leverage effect that led to the highest-ever operating profit for the third quarter.

Operating profit in the duty-free segment increased by KRW 3.7 billion compared to the previous quarter. Although profitability inevitably weakened due to the depletion of accumulated inventory, sales increased as demand rose during the Chinese holiday season. Furthermore, the withdrawal from the Gangnam branch in Seoul resulted in a reduction of fixed costs.

The fourth quarter of this year is also expected to achieve record-high results. Last month, same-store sales at department stores are estimated to have grown by about 16-17% year-on-year. Park Sang-jun, a researcher at Kiwoom Securities, explained, “From November, entering the With Corona phase will restore consumer sentiment. The duty-free segment in the fourth quarter plans to continue depleting accumulated inventory as in the first half, but mid-term sales recovery is expected due to the resumption of overseas travel.”

Accordingly, Kiwoom Securities maintained its investment opinion of ‘Buy’ on Shinsegae, with a target price of KRW 440,000. The closing price on the previous day was KRW 240,000.

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