Despite Weak Consumer Sentiment, Apparel Sales Rise... Fashion Industry Rebounds for Second Straight Quarter

Improved Earnings for Samsung C&T, Hansome, Shinsegae International, and LF
Rising Expectations for the First Half of the Year

Premium and Men's Apparel Demand on the Rise
Asset Market Boom Drives Consumption

Fashion companies are continuing their turnaround, emerging from a prolonged slump. A base effect from last year's slump, caused by the aftermath of martial law and abnormal weather that dampened consumer sentiment, is being compounded by the recent stock market rally, which has created a "wealth effect" and revived premium consumption. As department store sales continue to grow and major fashion brands show improved results, expectations for a broad industry upturn are rising.

According to the fashion industry on May 6, Samsung C&T Fashion Division recorded sales of 573 billion won and operating profit of 38 billion won in the first quarter of this year. These figures represent increases of 13.69% and 11.76%, respectively, compared to the same period last year. Major brands maintained stable growth, with national brands such as Beanpole and Galaxy achieving double-digit growth rates and driving performance.

Hyunsung, Shinsegae International, and LF are also expected to post strong first-quarter results. According to financial information provider FnGuide, Hyunsung's first-quarter consensus is sales of 408.9 billion won and operating profit of 34.5 billion won, up 7.5% and 58.3%, respectively, from a year earlier. Both scale and profitability are expected to improve this year. LF's first-quarter consensus is sales of 425.2 billion won and operating profit of 30.1 billion won. Seo Jeong-yeon, a researcher at Shin Young Securities, said, "LF was the first to signal a turnaround last year with its earnings revision announcement," adding, "If a fashion brand company posts strong results in the fourth quarter and the following first quarter, performance improvement usually continues through the first half of that year."

Shinsegae International is also expected to show notable improvement in profitability. The company is forecast to post sales of 296.5 billion won and operating profit of 11.6 billion won in the first quarter. While sales are expected to decline slightly year-on-year, operating profit is likely to more than double, signaling a significant uptick. Yoo Jeong-hyeon, a researcher at Daishin Securities, stated, "Considering Shinsegae International's decision to wind down the JAJU division, the actual sales growth rate stands at around 18%, indicating a very solid growth trajectory," and added, "A full-fledged trend of performance improvement is expected to begin from the first quarter of this year."

This trend is unusual as it contrasts with overall consumer sentiment. According to the Bank of Korea, the Composite Consumer Sentiment Index (CCSI) in April was 99.2, below the baseline of 100, entering a contraction phase for the first time in a year. Nevertheless, fashion consumption is showing a unique recovery. Analysts attribute this to the "wealth effect" stemming from asset market gains, which have increased purchasing power and boosted spending on apparel. In fact, apparel consumption has reached a three-year high. According to the Ministry of Trade, Industry and Energy, sales growth in department store apparel categories—women's and men's clothing—began to recover from the fourth quarter of last year. In the first quarter of this year, these categories posted growth rates exceeding 10% on average. Notably, demand has increased particularly for high-priced premium products, which stands out as a key feature.

The men's apparel market is also undergoing change. While fashion consumption has typically been centered around women's clothing, recently the proportion of direct purchases by male consumers has increased. An industry insider said, "Whereas the men's fashion market used to be driven largely by gifts or proxy purchases, there is now a noticeable shift toward self-satisfying consumption. With the strong asset market, consumer tendencies themselves are changing."

Experts predict this trend will continue for the time being. While overall consumer sentiment remains below the baseline, the "wealth effect" from rising asset markets is expected to sustain selective consumption. Apparel, in particular, is a category that clearly reflects the polarization of consumption, and as long as premium-driven demand persists, the recovery trend in performance is likely to continue. Furthermore, the growth in domestic apparel retail sales at the start of this year has outpaced that of major countries, fueling expectations for further improvement in the industry for the foreseeable future.

Jeong Ji-yoon, a researcher at NH Investment & Securities, analyzed, "After the revenge spending phase of 2021–2022, the years 2023–2025 saw a slowdown in semi-durable goods consumption, subdued consumer sentiment, burdens of high interest rates, and weakened real purchasing power, all of which contributed to a continued decline in performance. However, during this period, companies have strengthened their fundamentals through inventory optimization, cost control, and the restructuring of distribution channels. Apparel is the most representative category of Korea's polarized consumption, and thanks to robust sales recovery, department store apparel sales have surged since the beginning of the year. The semi-durable goods recovery cycle, seen for the first time in four years, is also benefiting the sector."

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