IBK Securities on the 26th said it expects strong third-quarter results for Hyundai Department Store. It raised its target price to 106,000 won from 96,000 won and maintained a buy rating. The previous trading day's closing price of Hyundai Department Store was 89,700 won.
IBK Securities estimated that in the third quarter this year, Hyundai Department Store's consolidation basis net sales will come in at 1.095 trillion won, with operating profit of 88.3 billion won. That would be improvements of 5.6% and 36.7%, respectively, from a year earlier.
As shopping demand increased due to consumption coupons and the heat wave in July–August, existing stores grew around 5%–6%, and the rise in demand for Chuseok gift sets in September and improvement from closing the unprofitable Dongdaemun duty-free store lifted results.
Nam Seong-hyeon, an analyst at IBK Securities, said, "In the third quarter, strong sales in jewelry, watches, and luxury goods were accompanied by a positive turn in categories that had been sluggish, such as apparel and home appliances," adding, "This was driven by the government's supplementary budget (a spillover benefit from consumption coupon payments and rebates for grade 1 efficient appliances), which led overall results."
The duty-free division is also expected to post positive results. The closure of the Dongdaemun duty-free store streamlined the expense structure, and the increase in foreign visitors to Korea is gradually restoring its customer-drawing power. Nam said, "Sales may decline somewhat due to the Dongdaemun store closure, but profitability will improve thanks to lower fixed costs." The duty-free division's operating profit is expected to swing to a surplus of 1.9 billion won.
However, ZINUS remains weak. A high base last year and the imposition of tariffs weighed on results. Nam said, "ZINUS's contribution to consolidation results is likely to decline through the first half of next year," adding, "However, with structural improvements in the duty-free division and a recovery in same-store sales growth in the core business, damage to fundamentals is not expected to be significant."