[Click eStock] "Hyundai Department Store, Accelerating Strong Earnings... Difficult to Improve Duty-Free Store Deficit"

[Asia Economy Reporter Hwang Yoon-joo] Heungkuk Securities analyzed on the 2nd that Hyundai Department Store's strong performance is expected to accelerate due to the favorable market for luxury goods centered on affluent customers and the increased sales proportion of fashion and accessories. Accordingly, they newly issued a 'Buy' investment rating with a target price of 100,000 KRW.

Jong-ryeol Park, a researcher at Heungkuk Securities, stated, "The consolidated total sales for Q2 are expected to increase by 11.2% year-on-year to 2.565 trillion KRW, and operating profit is projected to rise by 21.8% to 70.3 billion KRW, indicating a continued positive performance momentum."

Researcher Park explained, "Although the operating performance momentum is inevitably slowing compared to last year when the effect of new stores was significant, steady growth is expected to continue. The department store industry is anticipated to maintain a solid trend due to the strong luxury goods market centered on affluent customers."

Looking at each segment, the department store operating profit is expected to be 70.3 billion KRW, a 24.3% increase compared to the same period last year. The operating profit margin is forecasted to improve by 0.7 percentage points year-on-year to 4.7%.

Researcher Park analyzed, "Profitability improvement is progressing as a trend due to the reduction in the proportion of luxury goods sales and the increase in the proportion of high-margin products such as fashion, accessories, and food. However, the duty-free store continues to show a sluggish trend, contrary to initial expectations."

He evaluated, "The Q2 operating loss is expected to narrow slightly to 11 billion KRW compared to the previous quarter. The business is mainly focused on 'taigong' (parallel traders), resulting in high brokerage fees and product discount rates."

He added, "With the increase in outbound travel in July and August, the performance of airport duty-free stores is expected to gradually improve."

Meanwhile, regarding the 35.8% stake in Zinus, acquired last May, the company is still considering equity method evaluation and consolidation. Researcher Park said, "An official announcement is planned around the Q2 earnings release period (second week of July). Zinus recorded sales of 1.1238 trillion KRW and operating profit of 74.3 billion KRW last year."

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