Shinsegae Inter hit by cold winds from late heatwave... Operating profit plunges 44% last year (Comprehensive)

Operating Profit Down 44.9%, Sales Down 3.4% Last Year
Warm Weather and Weak Consumer Sentiment Lead to Fashion Industry Slump
"Intensive Restructuring... Full Efforts to Secure Profitability"

Shinsegae International recorded sluggish performance last year. It is interpreted that the company could not escape the impact of the domestic fashion market downturn caused by abnormal weather and deteriorating consumer sentiment.

Shinsegae International announced on the 5th that its consolidated operating profit for last year was tentatively estimated at 26.8 billion KRW. This is a 44.9% decrease compared to the previous year. During the same period, sales amounted to 1.3086 trillion KRW, down 3.4% from the previous year.

Exterior view of Shinsegae International Cheongdam Building.

Operating profit in the fourth quarter of last year was 300 million KRW, down 97.9% year-on-year, and sales were 382.3 billion KRW, down 2.6% year-on-year.

Shinsegae International explained that both sales and operating profit decreased as the overall domestic fashion market stagnated due to abnormal weather and worsening consumer sentiment. In particular, the fourth quarter was affected by an increase in one-time labor costs such as retirement benefit provisions following the Supreme Court ruling on ordinary wages in December last year, which impacted operating profit. Operating profit for the fourth quarter, excluding the effect of the change in the ordinary wage precedent, was around 7.3 billion KRW.

Last year, Shinsegae International acquired the K-beauty brand 'Amuse' and rebalanced its portfolio by reorganizing low-efficiency brands. It also secured distribution rights for globally renowned brands. In fashion, it secured new luxury brands such as The Row, Erdem, and Phoebe Philo, and in beauty, it newly introduced popular brands like Loewe Perfume and BareMinerals. The lifestyle brand JAJU achieved significant improvement in operating profit through business efficiency enhancement.

Shinsegae International plans to focus all efforts on securing profitability this year through intensive structural improvement. To this end, it has established a contingency plan and set key tasks including ▲ zero-based review of all costs ▲ maximizing asset efficiency ▲ securing core business competitiveness ▲ and efficiency-centered work innovation. Fixed costs will be frozen at the previous year's level, and all costs will be re-examined while maximizing cost and asset efficiency through reviewing the utilization of owned assets. Additionally, to secure core business competitiveness, it will promote rebranding of its own brands and undertake company-wide work innovation focused on return on investment (ROI).

In accordance with the corporate value enhancement plan announced at the end of last year, various policies to increase shareholder value, such as treasury stock cancellation and establishment of advanced dividend procedures, will also be implemented.

A Shinsegae International official said, “This year, we plan to concentrate all capabilities on strengthening profitability through company-wide structural improvement and securing core business competitiveness.”

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