[Click eStock] Hyundai Department Store, Clear Sangjeohago Pattern 'Second Half Profit Improvement'

On the 24th, IBK Investment & Securities maintained a buy rating and a target price of 75,000 KRW for Hyundai Department Store. Although weak performance is expected in the first quarter, it is judged that profits will improve in the second half of the year.

Hyundai Department Store's first-quarter operating results are expected to be sluggish. On a consolidated basis, total sales are projected to reach 2.6482 trillion KRW, up 16.0% from the same period last year, while operating profit is expected to decrease by 4.2% to 85.2 billion KRW. In particular, the same-store sales growth rate excluding the Daejeon branch is estimated at about 4%, and about 1% including the Daejeon branch.

Nam Seong-hyun, a researcher at IBK Investment & Securities, explained, "The first-quarter operating results are likely to be weaker compared to competitors due to the impact of the Daejeon branch's business suspension caused by a fire and a decline in contribution from sluggish luxury goods sales." He added, "Although growth in clothing sales was initially expected from the consolidation of Zinus, Zinus's performance improvement is uncertain, and growth in product categories other than clothing is sluggish, making profit growth difficult. Regarding duty-free stores, profitability is gradually improving, but sales decline due to reduced promotional expenses will limit profit contribution."

He particularly forecasted that improving operating results until the first half of the year would be difficult. Researcher Nam said, "In the second quarter, the base is high due to last year's strong growth in clothing, and operating expenses such as utilities and property tax burdens are increasing. Additionally, the impact of the Daejeon branch is likely to continue, so operating results are expected to be even weaker."

However, he emphasized the need to focus on the possibility of profit improvement in the second half. Researcher Nam stated, "From the third quarter, operating results are expected to recover as the Daejeon branch resumes operations, contribution from Zinus sales recovery increases, and airport duty-free store performance improves. Therefore, attention should be focused on the potential for profit improvement in the second half rather than the weakness in the first half."

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