[Click eStock] "Shinsegae, Q2 Earnings Slowdown Expected... Conservative Viewpoint"

IBK Investment & Securities

On the 20th, IBK Investment & Securities forecasted that Shinsegae's performance decline would continue into the second quarter. Accordingly, they maintained a buy rating and kept the target price at 270,000 KRW.

Nam Seong-hyun, a researcher at IBK Investment & Securities, stated, "A decline in Shinsegae's consolidated first-quarter performance is unavoidable," and estimated that "first-quarter consolidated sales will be 1.7098 trillion KRW (a 3.2% decrease year-on-year), and operating profit will be 127.6 billion KRW (a 22.0% decrease year-on-year)."

Researcher Nam analyzed, "The reasons for expecting operating performance to be weaker than the previous year include ▲ despite growth in existing department store locations, profitability is likely to decline due to limitations in product mix and operating leverage effects, ▲ increased costs due to special performance bonuses, ▲ decreased sales in the duty-free business division, △ deteriorated sales performance in the furniture business division due to a downturn in the construction market, and ▲ expected increases in variable costs such as utilities."

He added, "Recently, clothing sales growth has slowed due to a slowdown in the consumption economy and base effects, and the recovery of the duty-free business division is expected to be somewhat slow," and "a slowdown in luxury brand growth and a decrease in margin rates due to product mix are also anticipated."

He noted, "Last year was an unusually high-margin period," and said, "This year, the profit level is likely to be relatively lower due to a decrease in the proportion of clothing sales and the burden of property taxes (comprehensive real estate tax)."

He continued, "While improved performance compared to the first quarter can be expected in the duty-free sector, clear improvement will be difficult as demand decreases due to commission rate increases," and added, "It is advisable to approach with a somewhat conservative perspective."

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