[Click eStock] "Shinsegae International, Cosmetics and Household Goods Profitability Improves Despite Clothing Business Slump"

Meritz Securities maintained a buy rating and a target price of 25,000 KRW for Shinsegae International on the 7th, stating that while the apparel business is expected to be sluggish, profitability improvements in the cosmetics and household goods sectors will be prominent.

Shinsegae International's sales for the second quarter of this year are projected to decrease by 12.3% year-on-year to 336.9 billion KRW, and operating profit is expected to drop by 49.7% to 19.5 billion KRW. The decline in purchasing power and brand departures have been reflected, making profitability deterioration inevitable.

The apparel sector is estimated to record sales of 164.2 billion KRW, down 24.4% from the same period last year, and operating profit of 10.4 billion KRW, a 63.6% decrease. Hanuri, a Meritz Securities analyst, said, "Due to the expiration of distribution rights with major imported brands and intensified competition in golf apparel, overseas fashion sales and operating profit will be limited to 95 billion KRW and 5.7 billion KRW, respectively," adding, "Domestic fashion faces challenges in expanding scale due to the elimination of wholesale sourcing, but women's wear remains steady."

Sales and operating profit in the cosmetics sector are expected to be 99 billion KRW and 8 billion KRW, respectively, reflecting the strong performance of imports and the completion of the Swiss Perfection channel restructuring. The household goods sector is estimated to have sales of 73.7 billion KRW and operating profit of 2.5 billion KRW. The lipstick effect is evident, and benefits from the expansion of demand for low-priced products are anticipated.

Analyst Han said, "The apparel business will be sluggish due to the base burden and brand withdrawals," but added, "However, profitability improvements in cosmetics and household goods are expected to be prominent, and brand diversification remains effective."

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