Foreign tourist surge lifts Korean department store sales to records
A flood of overseas visitors and strong card spending helped Hyundai post record department store revenue, while Lotte and Shinsegae are expected to report similar gains.
Visitors walk in the Lotte Department Store in Jung District, central Seoul, on Aug. 2.YONHAP
A surge in foreign visitors to Korea is fueling record sales at the country's department stores.
Hyundai Department Store’s department store division recorded net revenue of 643.8 billion won ($452 million) in the second quarter, the highest ever for the April-to-June period, according to the department store on Wednesday. Operating profit for this year’s second quarter rose 58.6 percent from a year earlier to 110.1 billion won.
First-half net revenue also reached a new record of 1.28 trillion won, up 8.3 percent from the same period last year, while operating profit climbed 47.7 percent to 246 billion won.
The figure came as Korea welcomed an unprecedented number of foreign tourists this year. During the first half of this year, 10.71 million foreign visitors traveled to Korea, the highest figure ever recorded for the January-to-June period, according to the Ministry of Culture, Sports and Tourism on July 28.
Foreign visitors’ card spending also reached a record high.
Overseas visitors spent 1.04 trillion won by card during the first half, the highest since the government began compiling the data in 2018 and 50.8 percent more than a year earlier.
Lotte Department Store's Dongtan branch in Hwaseong, GyeonggiNEWS1
The Hyundai Seoul, a department store in Yeouido, western Seoul, and Hyundai Department Store's Trade Center Store branch in Gangnam District, southern Seoul, saw foreign customer sales jump 134 percent and 131 percent, respectively, from a year earlier. Foreign shoppers now account for nearly 20 percent of sales at both stores.
"The weak won, driven by the strong dollar, has made shopping in Korea relatively more affordable [for foreign visitors], which led to an unprecedented boom," a department store industry source said.
However, Hyundai Department Store's consolidated second quarter earnings, which include its department store, duty-free stores and Zinus, a furniture manufacturer, were less upbeat.
Consolidated net revenue fell 1.1 percent from a year earlier to 1.07 trillion won, while operating profit declined 8.7 percent to 79.3 billion won.
The weaker performance was largely due to Zinus, whose second quarter sales fell 35.7 percent from last year to 147.4 billion won. The manufacturer posted an operating loss of 26.7 billion won in this year’s second quarter.
The duty-free division returned to profit in the second quarter, posting net sales of 310.4 billion won and an operating profit of 6.2 billion won.
Hyundai Department Store's Pangyo branchHYUNDAI DEPARTMENT STORE
Lotte Department Store and Shinsegae Department Store are scheduled to report their second quarter earnings on Friday and Tuesday, respectively.
Lotte and Shinsegae Department Stores are expected to post another strong quarter after both retailers reported record first quarter sales, driven by robust spending from foreign tourists.
Lotte, Shinsegae and Hyundai Department Stores all expect annual sales from foreign shoppers to exceed 1 trillion won this year.
Lotte Department Store posted record first quarter sales and operating profit, with operating profit rising 47.1 percent year on year to 191.2 billion won and sales increasing 8.2 percent to 872.3 billion won.
Foreign customer sales reached 640 billion won in the first half, up 125 percent from a year earlier. Foreign shoppers accounted for nearly 30 percent of total sales at Lotte Department Store's flagship store during the first half of the year.
An Hermès shop in a department store in SeoulSHINSEGAE DEPARTMENT STORE
Shinsegae Department Store also reported record first quarter results, with sales rising 12.4 percent on year to 740.9 billion won, and operating profit increasing 30.7 percent to 141 billion won. Foreign customer sales reached 580 billion won during the first half, up 120 percent from the same period last year.
"Department stores have steadily strengthened their offerings, such as K-culture-themed pop-up stores and curated product selections," Lee Eun-hee, a professor of consumer studies at Inha University, said. "Even if exchange rates stabilize, the department store boom is likely to continue for quite some time. The 'luxury image' associated with department stores will also spill over into industries such as K-beauty and K-fashion, further boosting global confidence in Korean products."
BY KANG BO-HYUN [lee.jiwon10@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
