Eugene Securities noted that expectations for Shinsegae have decreased, but stated that the deficit in the duty-free business is expected to shrink, raising the target stock price to 190,000 won. The closing price of Shinsegae on 4th was 152,500 won.
On the 2nd, Research Institute Lee Hae-ni at Eugene Securities stated, "The increase in sales at Shinsegae department store will not offset the rising expenses," and added, "Operating profit is expected to decline slightly."
The department store is expected to see a slight decrease in profits with a sales increase of around 2%, while the duty-free shop is projected to see a sales increase of 11.9%. Eugene Securities forecasted that Shinsegae's expected sales for the first quarter will be 1.68 trillion won, with an operating profit of 145.2 billion won. Sales are expected to rise 4.8% compared to the same period last year, but operating profit is projected to decrease by 10.9%.
In the department store business, the cumulative growth rate for high-end products, such as watches and jewelry, recorded 30% in the first quarter. However, the growth of luxury goods was 7%, fashion -2%, living 2%, and food 2%, indicating a deepening polarization among items. The growth of high-end products is expected to continue to attract customers to the ultra-high-end luxury brand hall 'The Heritage', which opens in April.
The research institute stated that the duty-free business is expected to see sales growth by operating luxury brands in non-operated airport stores, but added that it is expected to maintain a deficit compared to the previous year, although the deficit is expected to shrink compared to the previous quarter.
Opening luxury stores at the airport is expected to quickly increase sales and contribute to the rise in operating profit in the duty-free business. The operation of the Myeongdong store is being streamlined as it transitions to a department store. The deficit in the second quarter is also expected to decrease somewhat due to savings in rent and labor costs following the closure of the Busan store.