韩国三大百货公司三季度营业利润预期被小幅下调，增长放缓但无新业绩实锤

South Korea's department store industry, which had posted steady earnings gains this year on rising foreign tourist spending and a wealth effect from a stock market rally, is seeing that improvement slow in the third quarter. Analysts have recently lowered third-quarter operating profit forecasts for all three major retailers — Lotte Shopping, Shinsegae and Hyundai Department Store — damping earnings expectations. Analysts attribute the shift to slowing growth in spending on luxury goods and other high-priced items that drove department store sales in the first half.
Third-quarter operating profit forecasts for the three retailers were all revised down over the past month, according to an analysis of major listed retailers by financial data provider FnGuide released on Oct. 18. The forecast for Lotte Shopping fell 1.4% to 179.7 billion won from 182.3 billion won a month earlier, while Shinsegae's was cut 1.9% to 178.1 billion won from 181.5 billion won. Hyundai Department Store saw the largest revision, down 5.6% to 91.1 billion won from 96.5 billion won.
Growth in the department store industry has been underpinned by expanding spending by foreign tourists. Sales to foreign customers at all Lotte Department Store outlets and at The Hyundai Seoul rose 110% and 135%, respectively, in the January-September period from a year earlier, while Shinsegae Department Store's main branch recorded 231% growth for the January-August period.
But analysts say the steep growth trend is gradually flattening as consumption cooled in the second half. The won-dollar exchange rate closed at 1,331 won on the 16th, its lowest level in two years, and the stronger won is reducing the price appeal of goods at Korean department stores for foreign tourists. A weaker domestic stock market is also expected to weigh, with the KOSPI falling to around 6,800 at the end of September from around 8,400 at the end of June, eroding the boost to spending from rising asset values.
Kiwoom Securities said sales growth at Korean department stores is slowing, led by appliances and luxury goods, as the wealth effect has shrunk amid the stock market's slower gains and as demand fell following promotional events by major appliance brands in June and July. Daishin Securities also said expectations for a wealth effect have faded as the KOSPI's upward momentum weakened, adding that growth in department store sales is slowing from the first half.
The trend is also showing up in department store sales data. Domestic department store sales rose 24.5% year-on-year in May and 22.2% in June, according to the Ministry of Trade, Industry and Energy's sales trends for major retailers. The increase then narrowed to 17.9% in July and 11.9% in August, the smallest gain so far this year.
Still, the industry expects department store conditions to return to steep growth as consumer sentiment recovers around the year-end. Ahead of performance bonus payments at major companies, shoppers may make advance purchases of luxury goods and other high-priced items. Spending could also pick up again in step with the year-end shopping season.
An industry official said concerns about slowing department store growth are real, given the recent decline in the exchange rate and increased stock market volatility that have partly reduced the wealth effect. The official added that an influx of foreign tourists, preemptive spending ahead of bonus payments and rising year-end gift demand are expected to offset the fallout from the slowdown in asset markets and keep the department store industry on a solid growth track.