Stumbling on High Base... Hyundai Department Store 1Q Operating Profit 77.9 Billion KRW, Down 12.4% (Comprehensive)

Department Store's High Base... Operating Profit 95.2 Billion KRW Down 7.4%
Impact of Reduced Duty-Free Promotions and Jinus US Order Restrictions

Hyundai Department Store recorded operating profit below expectations in the first quarter of this year. It was affected by the high base effect of the department store, the reduction of promotions for Chinese daigou shoppers at the duty-free shop, and order restrictions from Zinus's U.S. clients.

Hyundai Department Store announced on the 9th that its consolidated operating profit for the first quarter of this year was 77.9 billion KRW, down 12.4% compared to the same period last year. Sales during the same period increased by 17.5% to 1.0977 trillion KRW. Net profit was 69.5 billion KRW, down 7.8%. These figures are slightly lower than the market consensus (estimates) of operating profit of 82.1 billion KRW and sales of 1.1102 trillion KRW for the first quarter.

The Hyundai Seoul exterior view [Photo by Hyundai Department Store].

The department store division's operating profit decreased by 7.4% to 95.2 billion KRW. Sales increased by 5.4% to 572.7 billion KRW. With the endemic phase (periodic outbreak of infectious diseases), the fashion and cosmetics product categories advanced, increasing sales in the department store division. However, operating profit declined due to increased fixed costs such as promotional expenses and labor costs.

The duty-free shop division recorded an operating loss of 15.7 billion KRW in the first quarter. Sales also decreased by 21.8% to 332 billion KRW. Due to operational efficiency measures such as reduced promotions, the duty-free shop division's sales decreased by 21.8% and operating profit by 1.7 billion KRW compared to the same period last year.

Zinus's operating profit sharply dropped by 70.6% to 8.3 billion KRW. Sales also fell by 21.2% to 229.1 billion KRW. Domestic sales increased by 61.6% due to enhanced brand awareness following inclusion in Hyundai Department Store Group, and global market sales, mainly in Asian countries such as Japan and Indonesia, also rose by 25.6%. However, major mattress clients in the U.S., accounting for 84% of total sales, implemented order restriction policies to prevent excess inventory, causing a temporary decline in sales and operating profit in the first quarter.

Going forward, the duty-free shop division plans to maintain stable operations as the market environment improves with increasing domestic and international passenger demand, and with its selection as the final operator of the DF5 zone in the departure hall of Incheon International Airport, an expansion of the airport store is scheduled for the third quarter. Zinus also expects both sales and operating profit to improve as mattress supply to its main market, the U.S., increases from the second quarter onward.

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