Shinsegae Reports 122% Increase in Q2 Operating Profit Driven by Department Store Growth

Shinsegae has achieved its highest-ever operating profit for the first half of the year, driven by robust growth in its department stores and improved profitability across its subsidiaries. The department store sales, particularly in luxury goods, saw double-digit growth, while the duty-free shops, Shinsegae International, and Shinsegae Casa also returned to profitability, contributing to the overall performance improvement.

On August 11, Shinsegae reported that its consolidated total sales for the second quarter reached 3.1414 trillion won, an 8.5% increase compared to the same period last year. Operating profit surged to 167.1 billion won, marking a 121.9% rise. Cumulatively, the operating profit for the first half of the year reached 365 billion won, a 75.7% increase from the previous year, surpassing the previous record of 351 billion won set in the first half of 2022.

The department store segment was the primary driver of this performance. In the second quarter, total sales for department stores rose to 2.017 trillion won, a 15.5% increase, while operating profit climbed to 108.8 billion won, up 53.5%. Luxury sales increased by 35%, with fashion, living, and food categories also seeing growth of 10.1%, 16.6%, and 13.7%, respectively.

Additionally, the proportion of new customers in the first half was 27.7%, with those under 30 accounting for 45%. The opening of differentiated stores such as House of Shinsegae in Cheongdam, the Daegu Shinsegae women's fashion specialty store, and the South City sports specialty store has been credited with attracting new customers.

Foreign sales also experienced rapid growth. In the first half, foreign sales at Shinsegae Department Store reached 580 billion won, a 120% increase compared to the same period last year.

Looking ahead, Shinsegae plans to launch several new stores in the second half, including a luxury designer clothing specialty store at Daegu Shinsegae, a women's fashion specialty store at Hanam, and a hyperground at Cheonan-Asan.

Subsidiaries also improved their profitability. Shinsegae International reported second-quarter sales of 291.6 billion won, a 15.1% increase, with operating profit turning positive at 7 billion won, recovering from a loss of 7.1 billion won last year. The cosmetics division achieved record quarterly sales of 129.5 billion won.

Shinsegae DF, which operates duty-free shops, saw sales decline by 10.3% to 542.6 billion won, but operating profit reached 33.3 billion won, a turnaround from a loss of 1.5 billion won last year.

Shinsegae Central reported sales of 108.7 billion won and operating profit of 14.9 billion won, reflecting increases of 12.8% and 52.0%, respectively. Shinsegae Casa also saw a 104.5% increase in sales to 119.2 billion won, with operating profit turning positive at 2.4 billion won, aided by the acquisition of the JAJU brand.

Shinsegae Live Shopping recorded an 8.2% increase in sales to 86.8 billion won, but operating profit fell by 15.4% to 5.2 billion won due to investment costs.

A Shinsegae official stated, "Strategic investments and improvements in management structure aimed at creating future customers have resulted in positive operating results across all businesses in the first half. We will continue to create a momentum for significant growth through management efficiency and specialization in the second half."

Meanwhile, to enhance shareholder value, Shinsegae will implement a quarterly dividend for the second quarter. The dividend record date is set for August 31, with a payout of 1,300 won per common share.