Hyundai Department Store's consolidated operating profit for the second quarter decreased due to poor performance from its subsidiary, Zinus, which specializes in furniture and mattresses. However, the core business segments of department stores and duty-free shops reported strong results, bolstered by an increase in foreign tourists.
On August 5, Hyundai Department Store announced that its consolidated operating profit for the second quarter was 79.3 billion won, an 8.7% decrease compared to the same period last year. Revenue fell by 1.1% to 1.0681 trillion won, while net profit rose by 11.6% to 60.8 billion won.
Despite the overall decline in consolidated results, the department store sector achieved its highest performance ever.
The department store's second-quarter net sales reached 643.8 billion won, a 9.1% increase from the previous year, marking the highest quarterly sales on record. Operating profit also surged by 58.6% to 110.1 billion won. For the first half of the year, net sales reached 1.2764 trillion won, an 8.3% increase, while operating profit rose by 47.7% to 246 billion won.
Sales across key product categories, including luxury goods, watches, jewelry, and fashion, saw steady growth, driven by spending from foreign tourists. The company noted that foreign customers expanded their purchases to include not only high-end international brands but also domestic fashion and beauty products.
In the first half of this year, foreign sales at The Hyundai Seoul increased by 134% compared to the same period last year, while the Trade Center store saw a 131% rise. Foreign customers now account for about 20% of total sales at these two locations.
The nationalities of foreign customers visiting The Hyundai Seoul have also diversified. Initially dominated by tourists from China, Japan, and the United States, the customer base has recently expanded to include visitors from the United Arab Emirates and Kazakhstan. Approximately 180 countries have been represented among the store's clientele.
A Hyundai Department Store official stated, "The spending by foreign customers is continuously expanding across all product categories, including overseas luxury brands as well as domestic fashion and beauty brands, and we expect this growth trend to continue in the second half of the year."
The duty-free shop also continued its trend of improved performance. Hyundai Duty Free's second-quarter net sales reached 310.4 billion won, a 5.8% increase from the previous year. Operating profit turned around from a loss of 1.3 billion won in the second quarter of last year to a profit of 6.2 billion won this year, marking four consecutive quarters of profitability since the third quarter of last year.
For the first half of the year, the duty-free shop's operating profit was 9.6 billion won, a turnaround from a loss of 3.2 billion won during the same period last year. The opening of the DF2 area at Incheon Airport in April, which expanded the product range from luxury goods and fashion to include cosmetics and alcohol, contributed to this improvement.
A Hyundai Duty Free official commented, "The increase in foreign tourists and the new opening of the DF2 area at Incheon Airport have allowed us to achieve profitability in both the second quarter and the first half of the year, marking four consecutive quarters of profit since last year's third quarter. We expect the scale of profitability to continue to expand based on stable growth at the airport store and improved profitability at the downtown store."
In contrast, Zinus faced challenges due to a slowdown in consumer spending in its primary market, the United States, and a decrease in orders from clients. The second-quarter net sales fell by 35.7% to 147.5 billion won, resulting in an operating loss of 26.7 billion won.
A Hyundai Department Store official stated, "The decline in sales and operating profit was due to reduced demand for mattresses from clients as a result of weakened consumer spending in the U.S. However, client orders are gradually normalizing, and we are seeing an increase in new original design manufacturing (ODM) contracts."
* This article has been translated by AI.
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