Shinsegae Duty Free has reported third quarter 2018 sales of KRW706bn ($624m) a +114% increase year on year.

But the retailer, which revealed it was targeting sales of KRW3tn ($2.6bn) earlier this year, posted an operating loss of KRW3.2bn.

This was due to construction and marketing costs relating to the opening of its new Gangnam downtown duty free store on 18 July and start of operations at Incheon International Airport Terminal 1 in August, according to a statement seen by TRBusiness.

TOUGH BATTLE

Shinsegae, which recorded total sales worth $1.6bn in 2017 at Incheon International Airport and at its two downtown stores in Seoul and Busan, fought of strong competition from The Shilla Duty Free, to secure the T1 perfumes and cosmetics (DF1) and fashion and leatherwoods concessions (DF5).

These were re-tendered by Incheon International Airport Corporation after Lotte announced it was to surrender the contracts at the start at the start of the year.

According to Lotte, the withdrawal was due to the ‘burden of rent increase’ coupled with plunging Chinese tourist volumes due to THAAD and the extension of further government permits for four additional downtown duty free store licences.

Speaking to TRBusiness’ Asia correspondent David Hayes, Shinsegae Duty Free Merchandising Division Senior Vice President Hong Seok Ho said the retailer was targeting $120m in sales during the first year of trading at the new Gangnam store. The new outlet boasts 13,600sq m of retail space, occupying four lower floor levels in Shinsegae’s Gangnam Department Store.

He said: “Our target is Chinese customers for over 50% of sales and South Koreans 40%. Customers will buy pretty much the same goods as in our Shinsegae Duty Free Myeong-dong shop.”