[Click eStock] "Hyundai Department Store, Earnings Improvement Below Expectations... Duty-Free Shop Downside Risk"

[Asia Economy Reporter Lee Jung-yoon] On the 11th, Samsung Securities maintained a buy rating and a target price of 93,000 KRW for Hyundai Department Store, stating that although performance is normalizing due to strong sales in fashion and merchandise, the pace is falling short of expectations.

Hyundai Department Store's sales in the fourth quarter of last year increased by 71% year-on-year to 1.1 trillion KRW, and operating profit rose by 38% to 94.2 billion KRW. Researcher Park Eun-kyung of Samsung Securities explained, "This exceeds our sales estimate by 15% but falls short of our operating profit estimate by 23%. While sales in the duty-free business, which is recording operating losses, greatly exceeded our expectations, the department store sales we anticipated fell short of our estimates."

Researcher Park also analyzed that the department store's luxury goods sales maintain a high growth rate exceeding 20%, and the additional growth momentum has shifted from low-profitability electronics and furniture to high-profitability fashion and leisure, achieving sales growth accompanied by profitability improvement, which is positive. However, in the case of duty-free shops, demand for Chinese cosmetics has continued to weaken since last July, and if demand does not rebound, downside risks to performance are expected to persist.

Furthermore, Researcher Park forecasted Hyundai Department Store's sales and operating profit for this year to increase by 19% year-on-year to 4.26 trillion KRW and 375.4 billion KRW (+42%), respectively. Park stated, "This is 4% higher in sales but 5% lower in operating profit compared to our previous forecast. The reason for the upward revision of sales estimates is the upward adjustment of duty-free sales forecasts, and the downward revision of operating profit estimates is due to lowered expectations for the department store's performance, which is more profitable than the duty-free business."

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