[Click eStock] "GS Retail Expected to See Profit Growth in Q3 Driven by Consumer Coupon Effects"

On September 19, IBK Investment & Securities predicted that GS Retail's third-quarter performance would return to growth, driven by the effects of consumer coupon distribution and other factors. The investment opinion was maintained at 'Buy,' and the target price remained at 21,000 won.

GS Retail's consolidated sales for the third quarter are estimated at 3.1476 trillion won (up 3.0% year-on-year), with operating profit expected to reach 89.4 billion won (up 10.9%). Nam Sung-hyun, a researcher at IBK Investment & Securities, explained the outlook for strong performance by citing the following factors: the effect of consumer coupon distribution; improved profitability due to the closure of unprofitable stores; entry into the seasonal peak period and the impact of a low base in customer traffic last year; and improved new store opening effects as the number of stores turns to a net increase. The growth rate for existing convenience stores in the third quarter is estimated at 3%.

However, the supermarket and home shopping divisions are still expected to underperform. Nam noted, "In the case of supermarkets, the franchise rate is low, so many stores were designated as ineligible for consumer coupons, and home shopping transaction volume continues to decline due to the economic downturn. Although the company is focusing on defending profitability through cost efficiency, it remains a challenge so far."

Since the third quarter of this year, the pace of store closures among major convenience store operators has slowed, but the structural weakness of the self-employed market continues to be a source of concern. As of June, the proportion of self-employment stood at 19.4%, down about 0.9 percentage points compared to January 2022.

Nam emphasized, "Convenience stores are also experiencing an increase in unprofitable stores and subsequent closures due to these trends. While GS Retail's competitiveness is relatively strong, there is a need to establish strategies for structural growth."

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