"Stronger in Recession"... Convenience Stores' Q3 Earnings Outlook 'Rosy'

Advantageous for Defending Against Economic Slowdown

Customers are purchasing lunch boxes at the convenience store CU.

[Asia Economy Reporter Lim Chun-han] Amid recent concerns over economic recession due to high inflation and weakened consumer sentiment, the convenience store industry is expected to show strong performance in the third quarter of this year as well.

According to the industry on the 30th, Ebest Investment & Securities estimated BGF Retail's third-quarter sales to increase by 10% year-on-year to 2.0197 trillion KRW, and operating profit to rise by 24.2% to 86.3 billion KRW. According to the Ministry of Trade, Industry and Energy, convenience store channel sales growth rates were 10.4% in July and 12.8% in August, maintaining a favorable trend in both customer count and average spending per customer. By product category, it is judged that the mix improvement effect continues due to growth in fresh food (FF) and home meal replacement (HMR) sectors, which substitute dining-out demand caused by inflation.

Orin-ah, a researcher at Ebest Investment & Securities, said, "Based on the expected 2023 performance, the current stock price is at a 13.8 times price-to-earnings ratio, with some valuation pressure eased due to recent price adjustments," adding, "Within the retail sector, convenience stores are advantageous in benefiting from inflation and defending against economic slowdown, and BGF Retail is expected to maximize these effects."

Shinhan Investment Corp. forecasted that GS Retail's third-quarter sales and operating profit would reach 2.941 trillion KRW and 76.4 billion KRW, respectively, meeting consensus estimates. GS Retail is focusing on O4O (Online For Offline) services to encourage customers to visit stores. Representative services include Wine 25 Plus and half-price delivery service. They also launched "Uri Dongnae GS25," which integrates existing offline representative applications into one.

Jo Sang-hoon, a researcher at Shinhan Investment Corp., emphasized, "We present the convenience store sector as the most comfortable choice amid concerns over consumer economic slowdown," explaining, "This is because customer visits are normalizing due to the reopening effect, combined with store openings and inflation effects."

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