[Click eStock] "F&F, Store Expansion and Online Growth Expected... Benefiting from China's Lockdown Easing"

[Asia Economy Reporter Lee Jung-yoon] Hana Securities maintained a buy rating and a target price of 220,000 KRW on the 18th for F&F, citing continuous expansion of store numbers and high growth in online channels.

F&F's consolidated sales for the second quarter of this year are estimated at 351 billion KRW, up 12% year-on-year, and operating profit is expected to increase by 13% to 85 billion KRW. It is analyzed that MLB and MLB Kids sales will grow by 17% and 42%, respectively.

By channel, pure domestic sales are expected to increase by 30%, while duty-free channel sales are projected to decline by 25%. Discovery sales are expected to grow by 18% due to increased outdoor activities from the reopening effect. Sales of the Chinese subsidiary are forecasted to reach about 88.5 billion KRW, a 46% increase compared to the same period last year. This is attributed to a significant increase in the number of closed stores due to the lockdown in China that began in earnest in April, as well as an overall contraction in logistics and demand. However, the 6.18 event, the largest online shopping festival in China, performed better than expected, and the number of stores increased by 100 compared to the previous quarter even during the lockdown, maintaining growth momentum.

With the easing of COVID-19 lockdowns in China, the Chinese subsidiary's performance has been recovering since May. The proportion of closed stores among all Chinese stores improved from 20% in April to 12% in May, and last month the situation normalized.

Hana Securities researcher Seo Hyun-jung explained, "With logistics normalization, sales recovery in online and duty-free channels is also expected," adding, "Performance is expected to gradually improve after bottoming out in the second quarter." She continued, "Since China's retail sales turned positive year-on-year last month, if the domestic and international COVID-19 environment does not worsen, we can expect significantly better performance in the second half compared to the second quarter," and added, "Recently, the company has expanded its business area by acquiring the global tennis apparel brand Sergio Tacchini."

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