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Earnings

‘Revenge shopping’ lifts Korean retail giants’ Q2 earnings

Department stores saw their operating profits surge, led by luxury goods and fashion items

By Aug 13, 2021 (Gmt+09:00)

2 Min read

The Hyundai Seoul crowded with people
The Hyundai Seoul crowded with people

Major department stores in South Korea such as Shinsegae Department Store and Hyundai Department Store Co. have seen their earnings improve significantly in the second quarter thanks to “revenge shopping”, a post-lockdown shopping hype to purchase luxury goods and fashion items. 

On Aug. 12, Shinsegae announced that it swung to a profit in Q2 as it logged a consolidated operating profit of 96.2 billion won ($82.3 million), an all-time high for the group's second-quarter earnings. It also logged revenue of around 1.4 trillion won, up by 37.6% compared to the year-earlier period. Last year, Shinsegae had posted an operating loss of 43.1 billion won due to the global pandemic.

Hyundai Department Store also saw a huge turnaround with its Q2 consolidated operating profit reaching 57.7 billion won, up by 609.6% compared to the year-earlier period when it logged 8.1 billion won. Its Q2 operating profit was higher than the pre-pandemic operating profit of 50.7 billion won in Q2 2019. During the same period, its revenue rose by 67.2% to 863.8 billion won.

The department stores have been the driving force behind the retail giants' impressive Q2 earnings.

Shinsegae Department Store’s operating profit stood at 67 billion won, almost threefold compared to the previous year. The country's second-largest department store saw the sales of its women’s fashion and men’s fashion items recover in April alongside increased sales of luxury goods and foreign fashion brands.

Also, the department store industry has been making offline investments amid the global pandemic such as opening up new stores, aligned with the “revenge shopping” trend, where shoppers spend money on luxury goods to make up for their pandemic blues.

Shinsegae Department Store's new mall, Shinsegae Art & Science, will open this month in Daejeon.
Shinsegae Department Store's new mall, Shinsegae Art & Science, will open this month in Daejeon.


Earlier in February, Hyundai Department Store opened a new mall, The Hyundai Seoul, which helped boost its sales by 28.1%. This month, Shinsegae Department Store is also set to open up a new mall, Shinsegae Art & Science, in Daejeon, about 150 km south of Seoul.

“Shopping for luxury brands is an area that e-commerce players have not been able to dominate,” said an industry official, adding that the department stores' specialty in luxury goods shows that there is an offline segment that online players can’t replace or fully penetrate.

Shinsegae Group affiliates also performed well in Q2. The group's fashion unit, Shinsegae International Co., hit an all-time high operating profit of 26.5 billion won in Q2, driven by the flourishing luxury goods business.

E-Mart Inc., the supermarket chain under retail giant Shinsegae Group, successfully swung to a profit in three years as it logged an operating profit of 7.6 billion won in the second quarter of this year. Last year, it had posted an operating loss of 47.4 billion won.

Hyundai Department Store Duty Free Co. also saw its operating loss shrink from 18.1 billion won in Q2 2020 to 7.7 billion won in Q2 this year due to increased demand for foreign cosmetics brands.

Write to Yoo-chung Roh at yjroh@hankyung.com
Danbee Lee edited this article.
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