Shinsegae International is accelerating its rebound in results this year. Market attention had been focused on growth in the cosmetics institutional sector, but there is an assessment that the recovery in its core businesses of fashion and luxury is also playing a big role in improving overall performance.
◇ Filling Celine's vacancy with The Row and Phoebe Philo
According to the Financial Supervisory Service's electronic disclosure system on the 23rd, Shinsegae International posted 295.6 billion won in revenue and 14.8 billion won in operating profit on a consolidation basis in the first quarter. Compared with a year earlier, revenue rose 15.7% and operating profit increased 452.6%. There is an assessment that the effects of business restructuring and brand portfolio streamlining that continued through last year have begun to show up in results this year.
As of the first quarter, Shinsegae International's revenue mix was 58.1% fashion and 41.9% cosmetics. Cosmetics institutional sector revenue (standalone basis) was 110 billion won, up 19% from a year earlier. Operating profit was 8 billion won, up 299% over the same period.
Fashion institutional sector revenue (standalone basis) was 128.1 billion won, up 36% from a year earlier, and operating profit turned to the black at 4.4 billion won over the same period. In the first quarter, imported fashion brands' revenue growth rate was estimated at 37%, and domestic fashion brands at 18%. An industry official said, "When sales of high-end imported brands increase, it can reduce the burden of fixed costs as revenue grows while using the same stores, staff, and logistics network," adding, "This allows the fashion business to aim for both scale expansion and improved profitability at the same time."
Shinsegae International was spun off from Shinsegae Department Store in 1996 and has grown on the back of importing overseas fashion brands. By securing domestic distribution rights for global brands such as Armani, Brunello Cucinelli, and J.Lindeberg, it established its position in the high-end, department store-centered fashion market.
However, at the end of 2022, when core imported brand Celine decided to enter the domestic market directly, a gap emerged in Shinsegae International's imported fashion portfolio. Celine had been a solid brand generating stable revenue in the domestic market, and after the contract ended, both Shinsegae International's revenue and profitability were shaken.
In fact, Shinsegae International's annual revenue, which was 1.5539 trillion won in 2022, fell to 1.3543 trillion won in 2023.
Since then, Shinsegae International has moved to introduce new brands and improve efficiency in existing brands. It brought in brands drawing strong interest at home and abroad, such as The Row and Phoebe Philo, and expanded its luxury and contemporary brand portfolio with Erdem, Courrèges, and CFCL. While these brands do not have overwhelmingly high mass recognition compared with traditional luxury houses, they stand out for securing highly loyal demand, especially among fashion-engaged consumers and young high-income shoppers.
In particular, The Row and Phoebe Philo have gained attention in Korea in step with the "quiet luxury" trend. As a consumption pattern that emphasizes materials, silhouettes, and craftsmanship over front-and-center logos spreads, Shinsegae International's imported fashion portfolio is regaining momentum.
Market conditions are also turning favorable. This year, department store revenue is showing signs of recovery, with growth in sales of overseas premium brands standing out. According to the Ministry of Trade, Industry and Resources, department store revenue in April rose 21.7% from a year earlier. Among this, revenue from overseas premium brands increased 38.1%, showing one of the highest growth rates among major department store categories.
Brokerages are also focusing on the growth potential of the overseas fashion institutional sector. In a recent report, Jung Ji-yoon, an analyst at NH Investment & Securities, projected, "With a solid portfolio of high-end overseas fashion brands in place, overseas fashion revenue growth in May will approach 50%." The analysis is that recovering domestic consumption and a sharp increase in foreign tourists are combining to keep sales of high-end fashion brands strong in the second quarter.
◇ Rebranding in house fashion brands, too
Improvements in in house fashion brands are also helping the rebound in results. Shinsegae International operates in house fashion brands including Studio Tomboy, Vov, J.igott, Lielai, and Man on the Boon. Studio Tomboy is presenting collections that reinterpret nearly 50 years of brand heritage in a modern way, and Man on the Boon is also pursuing a rebranding that goes beyond its existing image centered on menswear for people in their 30s and 40s to target a broader customer base.
While in house brands are less likely than imported brands to sharply lift revenue in the short term, they are a key pillar for stabilizing profitability over the medium to long term. Imported brands carry risks such as contract termination or direct market entry, whereas with in house brands the company can lead product planning and distribution strategy. This is why Shinsegae International has been putting effort into strengthening the competitiveness of its in house brands after the Celine contract ended.
Business restructuring is also cited as a backdrop to improved results. In January, Shinsegae International transferred the lifestyle brand Jaju business to Shinsegae Casa. Jaju, a brand that sells household goods, bedding, and kitchenware, had reached a certain revenue scale, but had been assessed as having limited direct synergies with fashion and beauty.
Hyeong Gwon-hoon, an analyst at SK Securities, said, "The domestic consumption environment has remained strong since the fourth quarter of last year, and department stores are performing well as the number of tourists has surged. Shinsegae International, which distributes its brands mainly through department store channels, will also continue to show strong results," adding, "With the sale of Jaju, which had been posting losses, the company is expected to maintain stable profitability through a leaner expense structure."