Chuseok holiday fails to lift retailers’ shares

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Chuseok holiday fails to lift retailers’ shares

It was once a Chuseok tradition.

As sure as Spam ham gift sets would line supermarket shelves and families across the country would prepare ancestral rites ahead of the holiday known as Korean Thanksgiving, retailers’ share prices would also rise as people flocked to stores to buy holiday food and gifts. But long gone are the days when retailers’ stocks could expect buoyancy leading up to Chuseok.

With just one week until the holiday begins this year, the anticipated boom in retail shares is nowhere to be seen, the effect of a prolonged downturn amongst traditional retailers as more consumers turn to online shopping.

Analysts believe the holiday effect has not been strong enough to reverse declining trends among traditional retailers. Shares of major retailers including Hyundai Department Store and Shinsegae have either fallen or remained static.

“Some retailers will see an increase in sales during Chuseok,” said Nam Sung-hyun of Kiwoom Securities. “But what is important is whether they can generate meaningful sales growth compared to last year. In this respect, it is hard to see that now.”

Shares of Hyundai Department Store, for instance, stood at 122,500 won ($112.20) at the beginning of this month but closed at 120,500 won on Thursday, down 0.82 percent from the previous day. The share price had stayed in the 130,000 won range in July.

E-Mart, retail group Shinsegae’s supermarket chain and the largest in the country, also saw its stock value plunge deeper into the 150,000 won range entering this month. Until mid-August, the discount retailer had remained above the 160,000 won level.

Shares of E-Mart closed at 156,500 won on Thursday, down 0.32 percent from the previous day.

But things were different a few years ago when high-end department stores and big discount chains were the go-to places for gifts and supplies ahead of Chuseok. With online and mobile competitors almost non-existent, September was once considered a favorable month for brick-and-mortar retailers.

Shinsegae reported a record high of 595,000 won on Sept. 30, 2009, ahead of that year’s Chuseok holiday running from Oct. 2 to Oct. 4.

GS Home Shopping, a TV home shopping network, also posted a record-high stock price the same day.

In 2010, major mobile shopping platforms such as TMON and Coupang offered a limited range of “deal of the day” promotions, but they soon expanded their product lineups to include groceries and consumer electronics. Both companies are currently unlisted.

Another downward factor looming for retail shares is Korea’s new antigraft law due to go into effect on Sept. 28.

The regulation, better known as the Kim Young-ran Law, bans gifts of over 50,000 won and entertainment above 30,000 won to pubic officials and journalists, and it will likely hurt retailers’ sales.

In a report released last month on the new law’s anticipated effects, Goldman Sachs projected a loss of 1.2 trillion won for major retailers.

“Department stores are likely to be most adversely impacted given their exposure to stored-value gift cards and high-end gift sets followed by discount stores, while convenience stores remain relatively insulated in our view,” the report noted.

In their analysis, Goldman Sachs revised down the 2017 net income projection for retail units Shinsegae, Hyundai Department Store, E-Mart and KT&G by an average 11 percent.

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