Daishin Securities announced on June 15 that it is raising its target price for Shinsegae from 600,000 won to 1,000,000 won, citing improvements in department store and duty-free shop performance due to a recovery in domestic consumption and an increase in foreign tourists. The firm maintained its "buy" rating.
Yoo Jeong-hyun, a researcher at Daishin Securities, stated, "The domestic department store sector is entering a new growth phase, driven not only by a recovery in domestic consumption but also by a surge in sales from inbound tourists. All major subsidiaries of Shinsegae are expected to benefit significantly from this increase in inbound tourism, leading to continued improvements in department store and key subsidiary performance this year."
He projected that the growth rate of same-store sales for department stores in the second quarter would reach 26% on a managed basis, with strong sales in high-margin domestic fashion categories. The growth rate of foreign sales is expected to expand from 90% in the first quarter to over 110% in the second quarter, driving overall department store sales growth.
Yoo also noted that the flagship store in Myeongdong, which attracts a high number of foreign customers, is expected to see its same-store growth rate rise from 55% in the first quarter to over 70% in the second quarter. Factors such as the weak won and benefits from the Korea-Japan route are contributing to this growth.
He added that Shinsegae Duty Free is expected to see sales growth due to an increase in revenue from individual travelers and the expansion of regular store space at airports, while a decrease in discount rates at city stores is projected to lead to a return to profitability compared to the previous year. Shinsegae International is also expected to turn a profit, bolstered by strong domestic fashion consumption.
* This article has been translated by AI.
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