Kyobo Securities reported that E-Mart's core business growth continues, with expectations for gradual improvement in the performance of its major subsidiaries starting in the second half of the year. The firm maintained its 'buy' rating and target price of 110,000 won.
Research analyst Jeong Jin-young noted, "E-Mart's standalone operating profit for the second quarter of this year was 25.6 billion won, a 64.1% increase compared to the same period last year," adding, "Same-store sales growth rates were 3.8% for discount stores, 4.7% for Traders, and 10.6% for Everyday, indicating overall improvement in the core business."
In July, same-store sales growth rates were 8.6% for discount stores, 8.5% for Traders, and 12.5% for Everyday. Kyobo Securities expects strong sales trends to continue in August and September, driven by the base effect from last year's consumer recovery coupons and the Chuseok holiday. The firm also anticipates a benefit from the closure of some Homeplus stores.
Jeong stated, "The same-store sales growth rate for locations directly competing with closed competitor stores is about twice that of the overall stores."
Strengthening offline competitiveness is also expected. E-Mart plans to convert three discount stores into Starfield Market formats and open one new discount store and one new Traders location in the second half of the year. The sales growth rate for the four stores that were renovated in the first half of the year was approximately 13%.
Subsidiaries are expected to gradually recover starting in the second half of the year. Although major consolidated subsidiaries reported an operating loss of 50 billion won in the second quarter, Starbucks' daily sales in August improved by about 10% compared to the previous month. Analysts suggest that performance recovery could begin in the fourth quarter as marketing normalizes and the impact of coffee bean prices and exchange rates eases.
SSG.com is also expected to see a reduction in cost burdens in the second half of the year, as some marketing expenses related to the SSG Seven Club were preemptively incurred in the first half.
Jeong concluded, "We believe E-Mart's strong core business performance will continue, and subsidiaries are likely to see gradual performance improvements, creating a period where core business growth and subsidiary performance enhancements can occur simultaneously, strengthening overall performance momentum."
* This article has been translated by AI.
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