Convenience Store Leaders Recover from First-Half Decline: "Consumer Coupons and Structural Improvements Drive Results" (Comprehensive)

GS Retail Posts 111.1 Billion Won in Q3 Operating Profit, Up 31.6% Year-on-Year
BGF Retail Achieves 97.7 Billion Won in Operating Profit, Rising 7.1%

GS Retail and BGF Retail, the two leading players in the convenience store industry, both achieved a rebound in their third-quarter results this year. Designated as outlets for the government’s 13 trillion won consumer coupon program aimed at revitalizing the economy, and with a focus on solid management, the companies managed to overcome the shadow of negative growth seen in the first half of the year. In the competition between the two, GS Retail posted relatively better profits, driven by a notable recovery in same-store sales that have been operating for over a year, as well as diversification of its portfolio into supermarket (SSM), home shopping, and development businesses.

GS25 store. Provided by GS Retail

GS Retail, which operates the GS25 convenience store chain, announced on the 6th that its consolidated operating profit for the third quarter was provisionally tallied at 111.1 billion won, up 31.6% from the same period last year. This figure far surpasses the securities firms’ forecast of a 17.4% increase in operating profit. Sales reached 3.2054 trillion won, a 5.3% year-on-year increase, marking the highest quarterly sales in the company’s history.

The operating profit of the core convenience store division rose 16.7% year-on-year to 85.1 billion won, leading the overall performance. During this period, sales in the convenience store division also increased by 6.1% year-on-year to 2.449 trillion won. The convenience store segment accounts for 70% of GS Retail’s total sales.

BGF Retail, which operates the CU convenience store chain, also provisionally reported a consolidated operating profit of 97.7 billion won for the third quarter, up 7.1% from the same period last year. Sales rose by 5.9% to 2.4623 trillion won. The company’s third-quarter operating profit growth rate also exceeded the market consensus of 4.7%.

Previously, both GS Retail and BGF Retail saw their operating profits decline in the first half of the year to 130.4 billion won and 92 billion won, down 12.1% and 15.4% year-on-year, respectively, before turning to an upward trend. This turnaround is partly attributed to the effect of the consumer coupons distributed by the government since July. Among major offline sectors, convenience stores were the only ones designated as eligible outlets for the coupons, and thus benefited from the program.

CU store exterior. Provided by BGF Retail

However, the higher operating profit growth rate of GS Retail compared to BGF Retail is attributed to differences in same-store performance. In fact, GS Retail’s same-store sales in the third quarter increased by 4.4% year-on-year, whereas BGF Retail’s same-store sales decreased by 0.2% during the same period. A GS Retail representative explained, “We are strengthening our ‘scrap and build’ strategy, which involves relocating existing stores to better locations to nurture high-performing outlets. Through this, we are directly increasing the sales and profits of our franchisees.”

In addition, unlike CU, which earns 98% of its total sales from the convenience store segment, GS Retail has seen clear performance improvements by pursuing a diverse range of businesses such as supermarkets (GS The Fresh), home shopping (GS Shop), and development (including real estate investment and selecting tenants for offline shopping malls).

Both companies plan to continue focusing on solid management by limiting indiscriminate store expansion and concentrating new openings in high-performing regions. GS Retail has also moved to sell its subsidiary AboutPet, which it acquired in 2018. This online pet supplies retailer has accumulated losses of 80 billion won over the past seven years.

A GS Retail representative stated, “At the beginning of this year, we announced a strategy centered on core business growth and strengthening fundamentals, and the results of focusing on business efficiency and improving our structure in the first half are now evident as 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.”

BGF Retail also plans to lower its annual net increase target for CU store numbers from 500 to around 300. A BGF Retail representative said, “By continuously opening high-quality new stores, increasing our market share, and expanding the proportion of medium and large stores to strengthen store competitiveness, we aim to establish a foundation for mid- to long-term growth.”

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