Shinsegae reports net profit of 128.6 billion won for Q1

Industry

Published: 10 May. 2023, 17:21 Updated: 10 May. 2023, 17:57

Shinsegae reports net profit of 128.6 billion won for Q1

Shinsegae Department Store's main branch in Jung District, central Seoul [SHINSEGAE]

Shinsegae reported a net profit of 128.6 billion won ($97.1 million) for the first quarter this year, falling 14.8 percent on year due to decreased consumer spending from high inflation and an economic slowdown.

The figure exceeded the market consensus of 96.9 billion won compiled by FnGuide.

Sales fell 11.5 percent to 1.56 trillion won, below the analysts’ expectations of 1.7 trillion won.

Operating profit fell 6.8 percent to 152.4 billion won, falling short of market expectations of 155.3 billion won.

Shinsegae runs Shinsegae Department Store, Shinsegae Duty Free and subsidiaries like Shinsegae International.

Its department store business logged sales of 620.9 billion won, up 6.1 percent on year. The jump is due to an overall surge in sales of fashion, food, sports-related and livelihood products as the Covid-19 pandemic dwindles to an end.

Operating profit fell 9.2 percent to log 110.3 billion won due to an increase in management costs, such as distributing bonuses to all department store employees to commemorate the all-time high sales of 7.81 trillion won that Shinsegae logged last year.

The expense of the bonus distribution was reflected in the first quarter.

Sales for Shinsegae DF fell 33.8 percent to 511.2 billion won. Operating profit went black to log 24.3 billion won.

Sales fell as duty-free operators normalized commission fees for peddlers who purchase tax-free goods in Korea and sell them in China.

Operating profit surged as stores were vitalized again as travelers seeped in, especially airports.

Sales for Shinsegae International, which had largely contributed to the company’s surge in sales, fell 11.4 percent to 312.2 billion won. Operating profit dropped 69 percent to 10.3 billion won.

The drop is due to a one-off cost from distributing bonuses and ending its contracts with luxury brands such as Celine.

However, the subsidiary said domestic sales for fashion surged 11.2 percent as well as for cosmetics, which jumped 16.8 percent on year.

Shinsegae International aims to secure new growth engines by forming contracts with a minimum of four global fashion brands and three cosmetic brands. It will also increase competitiveness by having its in-house brands such as Studio Tomboy and Poiret, enter the global market.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]