[Click eStock] "Shinsegae Inter, Still Resilient Luxury Consumption Despite Economic Slowdown Concerns"

[Asia Economy Reporter Kwon Jae-hee] Korea Investment & Securities maintained its 'Buy' rating and a target price of 40,000 KRW for Shinsegae International on the 14th.

Shinsegae International's third-quarter sales are expected to reach 391 billion KRW, with an operating profit of 27.3 billion KRW. This aligns with market consensus. Despite concerns over economic slowdown, steady high-end consumption is expected to continuously drive growth in the import segment. Imported fashion sales and operating profit are projected to increase by 22% and 40% year-on-year, respectively. Profitability improvement continues due to leverage from strong sales, while domestic fashion is expected to see a dilution of growth in owned brands such as BOB and JIGGUT due to decreased sourcing sales from brands like Days. However, profitability improvement from restructuring is likely to enable a return to profitability. Cosmetics operating profit is expected to be 5 billion KRW, with imported cosmetics sales growing 20% year-on-year, continuing the growth trend. However, expenses for strengthening owned brands are ongoing.

Although concerns about consumption slowdown are rising due to interest rate hikes, luxury sales at department stores increased by 29% and 26% in July and August, respectively, proving that high-end consumption remains robust. The contrasting sales trends between luxury goods and general apparel, which emerged during the COVID-19 pandemic, are expected to be further amplified in the consumption slowdown phase. For imported fashion and cosmetics, since inventory is secured in advance for new season releases, the exchange rate burden on cost this year is limited. Additionally, considering high consumer loyalty, it is expected that future price increases will help offset exchange rate impacts.

Park Ha-kyung, a researcher at Korea Investment & Securities, analyzed, "While consumption behavior is becoming polarized, the company is responding agilely to market changes by strengthening its luxury import portfolio and improving profitability through restructuring of the underperforming owned fashion business." He added, "The company is maintaining a solid market share in the luxury market with a diverse brand lineup and will secure mid- to long-term growth drivers through discovering new brands and acquiring cosmetics brands."

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