Shinsegae Co. saw both third-quarter sales and operating profit increase from a year earlier. However, department store operating profit fell from the same period last year due to expanded investment and other factors.
Shinsegae Co. disclosed on the 7th that, on a consolidation basis, third-quarter gross sales rose 3.9% on-year to 2.8143 trillion won, and operating profit increased by 6.8 billion won (7.3%) to 99.8 billion won.
The department store business posted third-quarter gross sales of 1.7117 trillion won, up 1.4% from a year earlier. Due to factors including expanded investment for a renewal, operating profit came to 84 billion won, down 4.9% from the same period last year.
Shinsegae said it narrowed the decline in operating profit each quarter this year. It noted that profitability is improving and that the results of investment are increasingly becoming visible.
Shinsegae Department Store completed the Gangnam branch food hall renewal launched last year in Aug., unveiling the industry's largest and a differentiated food hall. The main store, Gangnam, Centum City, and Daegu Shinsegae, among other major branches, are also refurbishing their overseas fashion and fashion categories.
Through new customer acquisition via renewal and expanding customer experiences that span online and offline, it plans to maintain overwhelming competitiveness, including the No. 1 Gangnam branch nationwide and No. 3 Centum City, while also strengthening market dominance as hub stores at the main store, Daegu Shinsegae, Daejeon Shinsegae, and Gwangju Shinsegae.
Consolidation subsidiaries such as Shinsegae International and Shinsegae DF also held up well. Shinsegae International posted third-quarter sales of 310.4 billion won (+4.9%) and an operating loss of 2 billion won (-4.1 billion won).
The imported fashion division grew sales 12.1% by attracting new promising brands. The cosmetics division saw both imported and in-house brands grow evenly, recording the largest third-quarter sales ever at 111.1 billion won (+16.7%). This is the first year that third-quarter cosmetics sales, typically considered a seasonal off-peak period, have exceeded 100 billion won.
Operating profit recorded a loss due to a decline in domestic fashion sales and increased global investment in the cosmetics business, but with fashion demand rising amid early cold weather starting in Oct., it expects performance to improve starting in the upcoming fourth quarter.
Shinsegae DF reported sales of 538.8 billion won (+14.2%) and an operating loss of 5.6 billion won (+10.6 billion won). With an increase in the number of inbound and outbound travelers during the peak season, sales rose from last year, and operating profit also improved significantly through cost-efficiency efforts such as better commission terms for customer referrals.
Shinsegae Central saw both sales of 98.1 billion won (+3.9%) and operating profit of 27.6 billion won (+1.7 billion won) increase from last year due to higher rental revenue from hotels and other sources. Shinsegae Live Shopping posted sales of 84.6 billion won (+9.9%) and operating profit of 2.4 billion won (+1.1 billion won). Thanks to strong performance in proprietary fashion products such as Bluefit, affiliate-linked products, and the beauty and health category, both sales and operating profit rose from a year earlier.
Shinsegae Live Shopping launched its own menswear brand, Shinsegae Men's Collection, last month and plans to further bolster growth by broadening customer touchpoints with differentiated products, including continuously strengthening overseas brand licenses.
Shinsegae Casa recorded sales of 63.9 billion won (-6.9%) and an operating loss of 400 million won (-600 million won). Sales edged down from last year due to reduced new move-in volume amid a prolonged slump in the construction and real estate market, while higher material costs from exchange-rate fluctuations led to an operating loss.
A Shinsegae Co. official said, "From a mid- to long-term perspective, we have strengthened our core business competitiveness through continued investment, and the results appear to be becoming visible," adding, "We will continue solid growth through steady innovation and efforts to bolster competitiveness at each company, including the return of Incheon Airport DF2 and the restructuring of the JAJU business."