[Click eStock] Hyundai Department Store, Second Half Performance Improvement 'Duty-Free Shop Turns Profitable'

NH Investment & Securities announced on the 9th that it maintains a buy rating and a target price of 72,000 KRW for Hyundai Department Store. Over the past month, Hyundai Department Store's stock price has shown a remarkable upward trend within the retail sector. This reflects expectations for performance recovery following the reopening of the Daejeon outlet, which had suspended operations due to a fire, starting June 12, as well as anticipation of achieving a turnaround to profitability in the duty-free business in the second half of the year.

Researcher Ju Young-hoon of NH Investment & Securities stated, "Although the second-quarter results were somewhat disappointing, there is no need for concern as the outlook for the second half remains unchanged." The existing store growth rate recorded 5% in July and remains high in August, driven by the effect of the Daejeon outlet reopening, which is a higher performance compared to competitors. Ju added, "The duty-free business also appears certain to achieve its first-ever quarterly profit turnaround in the third quarter due to improved profitability. Given the low valuation and expected improvement in consolidated results in the second half, I recommend buying on any stock price decline caused by disappointment over the second-quarter results."

On a consolidated basis, second-quarter sales and operating profit were 970.3 billion KRW and 55.6 billion KRW, respectively, falling short of market expectations. These represent decreases of 14% and 22% year-on-year, respectively. The department store segment saw a significant decline in operating profit due to a high base in the same period last year and the non-operation of the Daejeon outlet. However, with the resumption of operations at the Daejeon store, operating profit is expected to return to growth from the third quarter onward. The duty-free segment recorded an operating loss of 800 million KRW. Although sales declined due to reduced commission fees and promotions, profitability improved significantly. Ju noted, "Additionally, the initial performance of the Incheon Airport duty-free store (DF5 zone), which began operations on July 1, is assessed to be better than expected, making a meaningful profit turnaround possible from the third quarter."

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