[Click eStock] "Hansome, 3Q Profitability Expected to Fall Short"…Target Price Down

NH Investment & Securities lowered the target price for Hansome from 27,000 KRW to 25,000 KRW on the 6th, citing that the company's profitability in the third quarter of this year is expected to fall short of market expectations. However, the buy rating was maintained.

Hansome's consolidated sales for the third quarter are expected to decrease by 3% year-on-year to 329.7 billion KRW, and operating profit is projected to drop 57% to 14.1 billion KRW, falling short of the consensus operating profit estimates. Nevertheless, a gradual sales recovery is anticipated from the fourth quarter as the base effect eases.

Growth rates by channel are estimated to decline by 4% year-on-year for online and 3% for offline. It is analyzed that the base effect and demand decline are inevitable across the industry. Recently, the performance of emerging brands continues, and due to the strong performance and increased transaction volume of new brands such as EQL, which has entered the market, the online penetration rate is expected to be maintained at around 20%.

Jiyoon Jeong, a researcher at NH Investment & Securities, stated, "An operating profit margin of 4.3% is expected in the third quarter, indicating a contraction in margins."

She added, "Considering the decrease in consumption of high-priced clothing and the increase in the proportion of carry-over sales, the cost of sales ratio is estimated to rise by 2 percentage points compared to the same period last year," and explained, "In August, the Canadian brand Moose Knuckles and the Italian brand Aspesi were launched, and in the third quarter, the net increase in stores was similar to the previous quarter. Reflecting the increase in labor costs, depreciation, and advertising and promotional expenses related to brand launches, the selling and administrative expense ratio is estimated to rise by 3.3 percentage points compared to the same period last year."

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