"Core Convenience Stores Rebound"... GS Retail's Q3 Operating Profit Up 31.6% Year-on-Year

1. 111.1 Billion Won... Surpassing Consensus by 17.4%
2. Convenience Store Operating Profit at 85.1 Billion Won... Driving Overall Results
3. Focus on Consumption Coupon Impact and High-Quality Store Expansion Strategy
4. "Solidifying Core Business Delivers Results"

GS Retail achieved a rebound in third-quarter results this year by focusing on solid management centered on its core business, particularly the strong performance of its convenience store operations.

K-Pop Demon Hunters products, a collaboration between Nongshim and Netflix, are displayed at the GS25 convenience store in Terminal 2 of Incheon International Airport. Photo by Yonhap News Agency

On November 6, GS Retail announced in a regulatory filing that its consolidated operating profit for the third quarter of this year was provisionally tallied at 111.1 billion won, up 31.6% from the same period last year. This figure far exceeds securities firms’ consensus estimate of a 17.4% increase in operating profit. Revenue reached 3.2054 trillion won, a 5.3% year-on-year increase, marking the highest quarterly sales in the company’s history.

In detail, operating profit from convenience stores through GS25 rose 16.7% year-on-year to 85.1 billion won, leading the overall results. During the same period, revenue from the convenience store segment increased by 6.1% to 2.449 trillion won compared to last year. This growth partially reflects the impact of government-issued livelihood recovery consumption coupons distributed since July. Convenience stores were the only major offline retail sector designated as eligible for these coupons, benefiting from the policy.

Additionally, the company explained that its profitability-focused strategy of opening high-quality new stores resulted in newly opened stores this year outperforming the average sales of all stores. Existing stores that have been in operation for over one year also saw a 4.4% sales increase, attributed to initiatives such as scrap-and-build projects (expanding store size or relocating to better locations) and the success of differentiated products.

Furthermore, the success of differentiated products such as Seoul Milk desserts, Netflix K-Pop Demon Hunters collaboration items, Anseongjae Highball, Eolbaksaja, and the Hyejaroun ready-to-eat meal series contributed to the earnings rebound.

Supermarket revenue, led by the GS The Fresh corporate supermarket (SSM), rose 8.5% year-on-year to 459.4 billion won. Quick commerce sales, achieved in collaboration with three delivery application companies, accounted for 7.6% of total supermarket sales during this period, demonstrating future growth potential. However, operating profit fell 33.8% to 9.2 billion won due to increased investment costs.

Home shopping sales declined 1.4% year-on-year to 247.5 billion won, and operating profit dropped 37.6% to 11.6 billion won, as TV viewership decreased and competition in online retail intensified.

In addition, development businesses such as real estate investment and tenant selection for offline shopping malls posted revenue of 8.3 billion won, up 2.2% from the same period last year, benefiting from a recovery in the rental business environment. Operating profit in this segment also improved, turning around from a 9 billion won loss last year. The common and other segments, including subsidiaries, saw sales decrease by 22.4% year-on-year to 41.7 billion won, but operating profit increased by 17.1 billion won, resulting in a 5.2 billion won surplus.

A GS Retail representative stated, "At the beginning of this year, we announced a strategy focused on core business growth and strengthening our fundamentals. By concentrating on operational efficiency in the first half and improving our business structure, we are now seeing the effects of establishing a new foundation for growth. Going forward, we will continue to enhance customer-centric products and services, focus on strengthening our fundamentals, and strive for sustainable business growth."

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