Cost Burden... Emart Q2 Operating Loss of 53 Billion Won 'Earnings Shock' (Update)

Q2 Consolidated Operating Loss of 53 Billion KRW... Deficit Widens
Significantly Below Market Estimate (Operating Loss of 20 Billion KRW)
Emart Separate Operating Loss of 25.8 Billion KRW, Impacted by Renewal Investment

Emart received a performance report for the second quarter of this year that fell significantly short of market expectations.

On the 14th, Emart announced that its consolidated operating loss for the second quarter of this year was 53 billion KRW, widening from an operating loss of 12.3 billion KRW in the same period last year. This figure fell far below the market consensus (operating loss of 20 billion KRW) compiled by FnGuide. During the same period, sales increased by 1.7% to 7.2711 trillion KRW, while net loss widened to 103.2 billion KRW compared to a net loss of 63.1 billion KRW in the same period last year.

It was explained that the operating loss was affected by the overall domestic market downturn due to weakened consumer sentiment caused by high interest rates and high inflation, as well as cost burdens from exchange rate increases at SCK Company and a decline in sales profit margin due to rising costs at Shinsegae Construction.

On a standalone basis, Emart’s second-quarter operating loss was recorded at 25.8 billion KRW, an increase in deficit compared to an operating loss of 19 billion KRW in the same period last year. Total sales decreased by 0.5% year-on-year to 3.939 trillion KRW. This was attributed to large-scale renewal investments, the closure of the Gayang store in September last year and the Seongsu store in April this year, and increased energy costs due to rising electricity prices.

Specialty stores such as No Brand recorded an operating profit increase of 7 billion KRW, reaching 10.8 billion KRW. Sales rose by 5.6% to 276.1 billion KRW.

Operating losses for SSG.com and Gmarket were recorded at 18.3 billion KRW and 11.3 billion KRW, respectively. Compared to the same period last year, the deficits narrowed by 22.2 billion KRW and 6.9 billion KRW, respectively. This was attributed to improved gross profit margins through logistics cost efficiency and a product mix focused on profitability.

Chosun Hotel & Resort also recorded an operating profit of 8.5 billion KRW, supported by improved occupancy rates due to the endemic phase (periodic outbreak of infectious diseases). This was an improvement of 7.1 billion KRW compared to the same period last year. Shinsegae Construction posted an operating loss of 30.9 billion KRW due to a decline in sales profit margin caused by rising costs.

Emart stated, "Sales growth effects are appearing from renewal investments aimed at transforming into a 'future-oriented Emart' with strengthened experiential content," adding, "If the renewal effects fully materialize in the second half, performance improvement will be achieved." Sales at eight major renewed stores in the first half of this year increased by about 10%. In the second half, store renewals will continue, including the Kintex store, which reopened after renewal in July.

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