BGF Retail Reports First Quarterly Operating Profit Exceeding 100 Billion Won

BGF Retail, which operates the CU convenience store chain, reported its first quarterly operating profit exceeding 100 billion won in the third quarter of this year.
 
Despite a slowdown in revenue growth due to the base effect from consumer coupon distributions last year and extreme heat, the company improved profitability thanks to increased spending by foreign tourists and strong sales of processed foods.
 
On November 5, BGF Retail announced that its consolidated revenue for the third quarter reached 2.5152 trillion won, a 2.1% increase compared to the same period last year. Operating profit rose by 3.2% to 100.8 billion won.
 
This marks the first time quarterly operating profit has surpassed 100 billion won. However, net profit decreased by 6.4% to 74.2 billion won due to increased financial costs, including foreign exchange losses.
 
For the first three quarters of this year, cumulative revenue reached 7.0624 trillion won, up 4.3% from the same period last year. Cumulative operating profit increased by 18.0% to 223.8 billion won.
 
The growth in performance was influenced by increased spending from foreign tourists. In the third quarter, CU's foreign sales surged by 66.8% compared to the previous year. This marks the third consecutive quarter of growth, following increases of 53.3% in the first quarter and 60.9% in the second quarter. The proportion of foreign sales also rose from 1.5% in the third quarter of last year to 2.5% this year, an increase of 1.0 percentage point.
 
Notably, foreign sales accounted for 35.5% of the total revenue increase in stores during the third quarter. Regionally, foreign sales in Busan increased by 133.3%, while the overall growth rate outside the capital region reached 80.3%. The proportion of stores generating foreign sales was 98.3%, indicating that spending is spreading beyond tourist areas to the entire country.
 
To attract foreign customers, BGF Retail operates a tax refund service with immediate reimbursement at over 800 stores. The company is also expanding its product offerings based on sales data from tourist areas and increasing the number of unmanned currency exchange kiosks.
 
Changes in product composition, focusing on processed foods, also contributed to profit improvement. In the third quarter, sales of snacks rose by 13.4%, ingredients by 7.7%, and bread, rice cakes, and desserts by 7.6%. The proportion of processed food sales increased to 45.9%, up 0.7 percentage points from the same period last year, while the share of tobacco decreased by 0.4 percentage points to 35.9%.
 
Products utilizing popular intellectual property (IP) such as 'Licenne,' as well as differentiated items like xylitol coffee candy and black truffle ham snacks, also saw strong sales.
 
Thanks to the increased sales share of processed foods, the gross profit margin rose from 18.9% in the third quarter of last year to 19.2% this year, a 0.3 percentage point increase. This growth occurred despite the burden of rising logistics costs due to increased oil prices.
 
Sales at existing stores also maintained an upward trend. The same-store sales growth rate for the third quarter was 0.9%, continuing its growth despite the base effect from consumer coupon distributions last year. The average transaction value increased by 1.2%, supporting revenue growth.
 
A BGF Retail official stated, "We plan to continue opening new stores focused on profitability and to increase the proportion of medium to large stores ranging from 25 to 40 pyeong."