Department store and duty-free business conditions are expected to recover, subsidiaries’ earnings to improve
“Expectation of the distribution industry with the start of vaccination ↑”
(Photo = Shinsegae)
As the domestic new coronavirus infection (Corona 19) vaccination begins on the 26th, investors are drawing attention. With the economic recovery, there are growing expectations that retailers’ earnings will improve and share prices will rise.
According to the financial investment industry on the 23rd, as the restrictions on external activities due to the re-proliferation of Corona 19 are eased, demand is expected to recover, mainly in the distribution industry.
In particular, the outlook for a recovery in sales in the department store industry is positive on recovering demand for fashion and general goods.
In the meantime, department stores have been one of the industries that have suffered the most damage from the Corona 19 effect. This is because sales were sluggish last year due to a drop in real demand due to a decrease in external activity despite the strong purchasing power of key key customer segments.
In fact, according to DB Financial Investment, in the United States, the S&P500 rose 7.3% from December 14th last year, when the corona19 vaccination began, until the 19th of this month (local time), of which the retail industry’s growth rate reached 20.8%. In the case of the eurozone, the STOXX50 rose 3.2% while the retail sector rose 10.7%.
“It is undeniable that the operating profit of the distribution industry can turn around this year,” said Kang Hyun-ki, a researcher at DB Financial Investment. Said.
The department store and duty-free business are expected to benefit the most from the commercialization of the Corona 19 vaccine as it is a channel that has been damaged by the aftermath of Corona 19.
In the securities industry, this year’s Shinsegae(275,500 +5.96%)It is expected that the competitiveness of Korea will emerge. Along with the recovery of the business conditions at department stores and duty-free stores, which were the worst last year, are expected to improve overall earnings at subsidiaries.
Shinsegae is unique with 30% of luxury goods in department stores and has the most excellent stores. In addition, it is analyzed that the effect of improving profits will be large due to the reduction of duty-free shop rental fees and the loss of impairment loss.
It is also necessary to shed light on the value of Shinsegae International and Sep.com, which are raising expectations for earnings due to the strong online business. As the value of the domestic e-commerce industry is being recalculated due to the promotion of the Coupang listing, the value of Shinsegae’s Shup.com stake is expected to be revalued.
Park Jong-ryul, a researcher at Hyundai Motor Securities, said, “This year, Shinsegae will be able to significantly improve its business performance in line with the base effect of last year and the recovery of the consumption economy following the gradual dissolution of Corona 19.” Together, subsidiaries are also expected to improve overall performance.”
[email protected] Reporter Eunji Cha, Hankyung.com
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