[Click eStock] "Hyundai Department Store, Earnings Expected to Improve from Second Half"

IBK Investment & Securities Report
Q2 Performance Declines Compared to Previous Year

On the 28th, IBK Investment & Securities maintained a buy rating and a target price of 75,000 KRW for Hyundai Department Store, expecting its performance to improve from the second half of the year.

In the second quarter, Hyundai Department Store's total sales are expected to grow by 6% year-on-year to 2.5773 trillion KRW. However, operating profit is predicted to decline by 28% to 51.1 billion KRW compared to the previous year, due to sluggish market conditions.

Nevertheless, the company is expected to record differentiated performance compared to competitors. The reopening of the Daejeon branch has begun, and efforts to improve the profitability of the duty-free store are expected to reduce losses. The renewal effect of the Mokdong branch and the reflected consolidated performance of Zinus are also anticipated. Nam Seong-hyun, a researcher at IBK Investment & Securities, stated, “It should be noted that last year’s high volume of clothing sales places a heavy burden on the department store division,” adding, “Operating profit margin is expected to decline due to relatively increased cost burdens such as utilities and heating expenses.”

In the second half of the year, a clear improvement trend is expected to be confirmed as the consumption economy gradually recovers. The reopening of the Daejeon branch from June is expected to contribute to the recovery of existing stores. The contribution of duty-free store performance is also expected to increase due to the recovery of foreign demand. The base effect of the department store division is predicted to gradually decrease.

Researcher Nam analyzed, “The first half was negative due to increased performance burdens and operational disruptions at the Daejeon branch,” and added, “As we move into the second half, the business environment is expected to turn favorable, and Zinus’s performance is also expected to gradually improve.”

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