[Click eStock] "Hyundai Department Store, 2Q Low Point... Prospects for Performance Improvement in Second Half"

IBK Investment & Securities maintained a buy rating and a target price of 75,000 KRW for Hyundai Department Store on the 10th, anticipating possible performance improvement in the second half of this year.

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

Hyundai Department Store's consolidated total sales for the first quarter of this year are estimated at 2.3657 trillion KRW, up 3.7% year-on-year, while operating profit decreased by 12.4% to 77.9 billion KRW, falling short of the estimated 85.2 billion KRW.

Nam Seong-hyun, a researcher at IBK Investment & Securities, explained, "The reason the first-quarter performance fell short of expectations was that an increase in operating profit from the department store division was initially anticipated, but fixed costs such as utility expenses and labor costs hindered this growth. Additionally, the operating profit of Zinus, which was consolidated, also fell short of expectations. Despite consolidation, Zinus experienced an absolute profit decline due to goodwill amortization exceeding operating profit."

It was judged that performance improvement for Hyundai Department Store would not be easy until the second quarter of this year. This is because the base is high due to last year's growth in clothing, and the period is marked by increased utility expenses and heavier property tax burdens. Furthermore, the reopening of the Daejeon branch is expected to be difficult, and Zinus's sluggishness is projected to continue for the time being.

Researcher Nam stated, "Hyundai Department Store is expected to show clear performance improvement in the second half of the year, driven by the effects of reopening the Daejeon branch, increased contribution from the recovery of Zinus sales, and expanded contribution from duty-free store performance. This year is a period where the previously heightened performance burden intensifies, and with the ongoing slowdown in consumer sentiment, performance improvement is indeed challenging." He added, "However, considering that the business environment may turn favorable as we move into the second half, we view this positively."

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