Shinsegae Duty Free Q424 sales boost marred by slump in profits

By Benedict Evans |

– TRBusiness

Shinsgae Duty Free is focusing on building up its portfolio at Incheon International Airport to ward off the impact of softening downtown revenues and significant declines in operating profit.

Shinsegae Duty Free has reported a major Q424 boost in net sales, which rose 14.7% year-on-year to KRW555bn ($382m), but saw a marked decline in operating profit, with a loss of KRW36bn  ($24.8bn0 on the quarter.

The Korean retailer attributed these polarised conditions to weak airport sales and and increased rental burden due to a sharp rise in exchange rates as well as the initiation of voluntary retirements following the closure of its duty free store in Busan.

In early January, Shinsegae initiated the closure of its Centrum City store, citing a combination of factors, including  the steep rise in the USD-KRW exchange rate undermining the price competitiveness of duty free products, resulting in fewer visitors overall, the weakening of the Japanese yen, and a decline in cruise tourism to the region.

The full year picture told much the same story, as  Shinsegae Duty Free recorded a 4.7% rise in net sales to KRW2.6tn, but an operating loss of KRW 35.9bn.

Shinsegae’s department stores performed similarly in Q424 and across the entire fiscal year.
Though total sales fell 1.1% from KRW2.3bn to KRW2.08bn in Q424 the division posted KRW7.24tn ($5bn) in sales for the full year, a 2.8% rise.
In contrast to its downtown Busan store, Shinsegae’s Central City continued revenue growth across both the hotel and terminal.
The hotel’s ADR (Average Daily Rate) was up 12% on the year and terminal passenger traffic rose 4% in the same period. Sales across both  jumped 7.3% (KRW375bn) on the year, as operating profit also jumped 6% to KRW86bn.

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