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Hyundai Department store’s profit drops

Hyundai

Hyundai Department Store, parent company to the newest entrant to Korea’s duty free market, has posted a -23.8 precent slump in second-quarter operating profit, driven by heavy losses in the duty free business.

SEE ALSO : Hyundai Department Store Group to take over Doota Duty Free

The news comes as the retailer prepares to bid for one of three new downtown duty free licences being made available by the government.

Hyundai Department Store Duty Free opened for business in the company’s renowned Coex Department Store in Seoul on 1 November 2018 and is keen to expand its market presence. The company seems sure to pick up one of the new Seoul licences in the tender which will be conducted this week between 11 and 14 November by Korea Customs Service.

Industry insiders expect Hyundai Duty Free to be the only aggressive bidder as the powerful conglomerate seeks to bolster a duty free portfolio currently limited to just the Coex store in Gangnam.

Hyundai Department Store reported a +13.1 percent year-on-year increase in gross sales to KRW1,554 billion (US$1.297 billion) in the quarter. The department store grew just +0.2 percent year-on-year, which the retailer attributed partly to the widespread boycott of Japanese goods due to the escalating political dispute between the two countries.

Sales at the duty free store injected much needed momentum to the group’s top line with the duty free business grossing KRW11 billion (US$176 million) in sales.

Hyundai Department Store reported a +13.1 percent year-on-year increase in gross sales to KRW1,554 billion (US$1.297 billion) in the quarter. The department store grew just +0.2 percent year-on-year, which the retailer attributed partly to the widespread boycott of Japanese goods due to the escalating political dispute between the two countries.

Sales at the duty free store injected much needed momentum to the group’s top line with the duty free business grossing KRW11 billion (US$176 million) in sales.

Although the duty free arm’s operating margin improved quarter-on-quarter from -10.0 percent to -8.1 percent, the heavy loss resulted in Hyundai Department Store’s overall operating profit plummeting -23.8 percent year-on-year to KRW 1 billion (US$50.8 million).

Tender time comes around again

Hyundai will have the opportunity to add to its duty free portfolio this week if, as expected, Korea Customs Service opens the tender for five new duty free licences (three in Seoul, one in Incheon and one in Gwangju) from 11 to 14 November.

SEE ALSO : Hyundai opens first Duty Free store in Seoul

Despite the government’s bullish decision to provide more licences for large-scale operators, the business community’s assessment of the sector’s state of health is less upbeat, and few players are expected to bid for the once-coveted licences in the upcoming tender.

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