"Being Cash-Rich, We Don't Need It" Daiso Achieves Record Results Last Year, Reasons for Not Going Public [Weekend Money]

Huge Operating Profits... Outperforming Major Hypermarkets
Ample Cash Reserves Make Capital Raising Through IPO Unnecessary

Yonhap News Agency

Daiso, which has become a dominant player in the domestic retail market with its high cost-effectiveness and affordable household goods, achieved record-breaking results last year. According to securities industry experts, Daiso maintains a solid financial structure and strong cash generation capabilities, making immediate capital raising through an initial public offering (IPO) unnecessary.

According to the retail industry on May 9, Daiso (A-Sung Daiso) posted its highest-ever annual sales and operating profit last year, with sales reaching 4.5363 trillion won and operating profit at 442.4 billion won, up 14.3% and 19.2%, respectively, compared to the previous year. Notably, its operating profit surpassed that of major hypermarkets such as Emart and Lotte Mart, which have traditionally dominated the retail sector.

A Daiso store located in Jongno-gu, Seoul. Photo by Yongjun Cho jun21@

Daiso explained the background of its strong performance, stating, "Amid the polarization of consumption due to high inflation, rational spending focused on cost-effectiveness has spread. The expansion of strategic products such as cosmetics, fashion, and health supplements, as well as the popularity of seasonal and series products for summer and Christmas, drove our growth."

As Daiso has grown into a giant corporation, the securities industry is analyzing why Daiso has not chosen to go public. In its recent report, “Why Isn't Daiso Going Public?”, KB Securities explained, "Daiso has grown fivefold over the past decade, and now possesses an excellent financial structure and robust cash generation ability, resulting in a low need for immediate capital raising through an IPO."

Despite most of its products being priced between 1,000 and 5,000 won, Daiso boasts an operating margin of around 10%, which is significantly higher than Emart (1.67%, standalone basis) and Coupang (1.44%). Advertising expenses are minimal (just 0.12% of sales), while its proprietary logistics system and automation also keep logistics costs low. In addition, bulk purchasing, cash payments, and direct negotiations with manufacturers help reduce costs further.

Tae Yunseon, a research analyst at KB Securities, explained, "Daiso’s domestic sales level is similar to Homeplus and Lotte Mart, and, excluding affiliates of major conglomerates, it ranks among the very largest unlisted companies in terms of sales or corporate value. However, its outstanding financial structure and cash generation capabilities mean there is little need for capital raising through an IPO."

Analyst Tae added, "As the high inflationary environment persists, the domestic consumption market is exhibiting a typical K-shaped pattern, with polarization intensifying. As a result, cost-effectiveness and ultra-low prices have become the prevailing trends, and Daiso is benefiting from this trend, driven by high inflation and the deepening polarization of consumption."

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