[Click eStock] "Shinsegae International Expected to Benefit from Luxury Market Growth"

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[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 40,000 KRW for Shinsegae International on the 15th, expecting it to benefit from the growth of the luxury market.

First-quarter sales and operating profit are expected to reach 358 billion KRW and 26 billion KRW, respectively, representing growth of 5% and 22% compared to the same period last year. Operating profit is forecasted to exceed market expectations by 11%. The high growth of imported brands is the key driver of performance improvement.

Fashion operating profit is expected to increase by 41% year-on-year to 18 billion KRW. Imported fashion is projected to see a 32% increase in operating profit due to strong sales. Domestic fashion is also expected to perform well both domestically and internationally, with operating profit margin rising by 1.3 percentage points year-on-year, supported by the growth of Tomboy. Operating profit in the cosmetics segment is expected to decline by 22% to 9 billion KRW. While in-house brands are underperforming due to restructuring, high-margin imported cosmetics sales are expected to increase by 7% compared to the previous year.

Department store growth continues to be led by luxury goods. Luxury sales in January and February increased by 47% and 33%, respectively, compared to the same period last year, surpassing the overall department store sales growth rate. Ha-kyung Park, a researcher at Korea Investment & Securities, said, “While trends between luxury goods and general apparel are sharply diverging, Shinsegae International is responding to market changes by strengthening its overseas fashion lineup and restructuring its domestic fashion business. As luxury consumption shifts online, its own mall, SI Village, is gaining attention; since it imports and distributes through official licenses, the authenticity trust is high.”

Due to the high growth of the domestic luxury market, attempts by overseas brands to enter directly are increasing. Although this poses a negative factor for Shinsegae International, which operates distribution through licensing, it is analyzed as proof of the company’s brand discovery capability and distribution network strength. Previously, the company not only developed fashion but also introduced lesser-known overseas perfume brands domestically, helping to open the niche perfume market.

Researcher Ha-kyung Park added, “The proportion of China in the cosmetics business is shrinking, and supported by the growth of the domestic perfume market, the share of high-profit imported cosmetics will expand. Along with discovering new brands and growing imported cosmetics, the company will secure mid- to long-term growth engines by fostering its own cosmetics brands.”

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