Shinsegae profit jumps nearly 122% on luxury rebound

Shinsegae Inc., the department store arm of the retail conglomerate Shinsegae Group, saw its operating profit rise 121.9 percent to 167.1 billion won ($118 million) in the second quarter on year as sales rose to 3.14 trillion won, the department store operator said Tuesday, as luxury sales climbed and spending by foreign shoppers grew at a triple-digit rate at its flagship stores.

The result beat the 152.6 billion won consensus estimate compiled by FnGuide. Sales at the retail group, which spans department stores, duty-free and fashion, rose 8.5 percent on year.

For the first half of the year, operating profit rose 75.7 percent to 365 billion won and sales rose 10.1 percent to 6.36 trillion won, both records for the company.

The department store business booked 2.02 trillion won in sales for the quarter, up 15.5 percent over a year ago, and operating profit of 108.8 billion won, up 53.5 percent. Those figures combine Shinsegae Inc. with the separately incorporated Gwangju Shinsegae, Daegu Shinsegae and Daejeon Shinsegae Art & Science.

Growth was spread across categories in the first half. Luxury sales rose 35 percent, home and living 16.6 percent, food 13.7 percent and fashion 10.1 percent.

New shoppers accounted for 27.7 percent of department store customers in the first half, and 45 percent of that group were in their 30s or younger, the company said, attributing the shift to store renovations and pop-up programming aimed at younger buyers.

Sales to foreign customers rose 120 percent on year to 580 billion won over the same period.

All consolidated subsidiaries were profitable in the first half.

Shinsegae International, the fashion and beauty affiliate, posted second quarter revenue of 291.6 billion won, up 15.1 percent, and an operating profit of 7 billion won, against a 7.1 billion won loss a year earlier. First-half revenue rose 15.4 percent to 587.2 billion won, with operating profit of 21.8 billion won, compared to a 4.4 billion won loss.

Its cosmetics division logged a record quarterly revenue of 129.5 billion won. Imported fashion sales rose 31.8 percent on-year and imported cosmetics 18.5 percent. Among in-house labels, Harley-Davidson Collections grew 70 percent, Ilail 34 percent and Della Lana 14 percent.

Shinsegae DF, which runs the group's duty-free business, reported quarterly revenue of 542.6 billion won, down 10.3 percent, but swung to an operating profit of 33.3 billion won from a 1.5 billion won loss a year earlier. First-half revenue slipped 3 percent to 1.13 trillion won, while operating profit came to 43.9 billion won, against a 3.9 billion won loss.

At its Myeongdong downtown store, second quarter sales rose 273 percent among Thai shoppers, 184 percent among Australians, 93 percent among Canadians and 22 percent among Americans.

Shinsegae Central, which operates the Central City complex in Seocho District, southern Seoul, posted revenue of 108.7 billion won, up 12.8 percent, and operating profit of 14.9 billion won, up 52 percent.

Shinsegae Casa, the furniture and home goods unit, more than doubled revenue to 119.2 billion won after taking over the JAJU lifestyle brand, and turned an operating profit of 2.4 billion won from a 1.8 billion won loss.

Shinsegae Live Shopping reported revenue of 86.8 billion won, up 8.2 percent, while operating profit slipped to 5.2 billion won from 6 billion won on higher spending to build out its channels.

BY KIM MIN-YOUNG [kim.minyoung5@joongang.co.kr]