IBK Securities said on the 22nd that Hyundai Department Store is expected to accept a report card that falls somewhat short of market expectations for the first quarter this year due to weak results at its subsidiary ZINUS.
However, it maintained a "buy" investment opinion and a target price of 130,000 won, seeing solid growth in the core department store business and expecting structural improvements at subsidiaries to show in the second half. Hyundai Department Store's previous closing price was 92,300 won.
Hyundai Department Store's first-quarter net sales on a consolidation basis are estimated at 1.1543 trillion won, up 5.1% from a year earlier, with operating profit at 100.4 billion won, down 10.8%.
IBK Securities assessed that while the department store sector continued steady growth, the reflection of weak results at Hyundai Department Store's subsidiary ZINUS led to overall sluggish performance.
Nam Seong-hyeon, an analyst at IBK Securities, said, "The department store sector is maintaining the growth trend that began in the second half of last year, with same-store sales growth at about 7%," and added, "Department store results grew on the back of expanded high-end consumption from rising asset values, a higher share of sales to foreigners, and a recovery in sales of apparel categories."
By contrast, ZINUS is inevitably expected to swing to a loss in the first quarter this year. That is because the base effect from last year's reversal of antidumping tariffs, temporary expense increases during management streamlining, and weak industry conditions overlapped.
However, IBK Securities predicted that starting in the second half of this year, ZINUS's efficiency work will enter the final stage and Hyundai Department Store's performance momentum will strengthen as sales floor space expands at the Incheon Airport duty-free store.
Nam said, "In the second half, performance improvement in structurally non-department store business sectors is highly likely to become visible," and predicted, "Considering that the share of luxury is relatively small compared with competitors, performance momentum will actually strengthen."