Shinsegae feels recovery and a record for sales

The Shinsegae Department Store in Daejeon that opened in August [NEWS1]

Shinsegae Inc. reported 188.87 billion won ($160 million) in net profit on record third quarter sales, according to a preliminary earnings report Tuesday.

Net profit jumped 21,921 percent on year in the July-September period, the company said. Sales were up 37.3 percent to 1.67 trillion won, a record high for a third quarter and beating a 1.45-trillion-won market consensus.

Shinsegae runs Shinsegae Department Store and subsidiaries like Shinsegae International.

Shinsegae Department Store saw its third quarter sales rise 15 percent on year to 509.6 billion won. Operating profit jumped 81.1 percent to 72.7 billion won. Growth was led by women’s and men’s fashion.

Store renovations and the recovery of consumer sentiment helped raise earnings, said Shinsegae.

Shinsegae Department Store renovated the first floor of its branch in Gangnam, southern Seoul, to offer more diversified cosmetics products from high end brands like Chanel.

A new branch in Daejeon performed well. Sales from Aug. 25 through September were 40 percent higher than its sales target for the period.

Shinsegae International saw sales inch up 4.9 percent on year to 350 billion won. Operating profit more than doubled to 14.1 billion won, led by growth of fashion and beauty products.

Shinsegae International imports and distributes global fashion and cosmetics brands, including Celine and Stella McCartney.

Shinsegae Duty Free reported a 22.9 billion won operating profit compared to a 20.5 billion won operating loss in the third quarter of last year. Sales were up 82.3 percent on year to 797 billion won thanks to reduced accounting costs and the revised rental fees for airport stores.

A spokesperson for Shinsegae said that it plans to “continue to report good earnings in the fourth quarter based on the strengthening of offline stores, growth of our subsidiaries and recovery of Shinsegae Duty Free.”

“Recovery of outdoor activities and the season to buy outwear [in winter] are expected to lead growth at its department stores in the fourth quarter,” said Oh Li-na, an analyst at eBest Investment & Securities.“

Shinsegae shares closed 0.83 percent down on Tuesday to 240,000 won.

BY JIN MIN-JI [jin.minji@joongang.co.kr]