GS Retail has reported a significant increase in its second-quarter operating profit, reaching 109.4 billion won, thanks to balanced growth across its three main business areas: convenience stores, supermarkets, and home shopping.
The surge in sales at existing GS25 stores, along with rising demand for fresh food and foreign customers, has become a new growth driver. GS The Fresh and GS Shop also contributed to improved profitability.
On August 7, GS Retail announced that its consolidated operating profit for the second quarter of this year was 109.4 billion won, a 27.5% increase compared to the same period last year. Sales rose to 3.175 trillion won, up 6.7% year-on-year, while net profit soared to 64.6 billion won, marking a 354.5% increase.
The results exceeded analysts' expectations. Daishin Securities had projected GS Retail's second-quarter operating profit at 102 billion won, while LS Securities had estimated it at 94.7 billion won. Both firms cited growth in same-store sales at convenience stores and improved profitability in supermarkets and home shopping as key factors for the better-than-expected results.
GS25 led the performance improvement, with second-quarter sales reaching 2.3844 trillion won, a 7.1% increase from the previous year, and operating profit rising 21% to 71.4 billion won. The average daily sales growth rate for existing stores was 7.5%.
The expansion of stores specializing in fresh food has positively impacted customer numbers and average transaction values. GS25 has increased its fresh-focused stores, which offer groceries like vegetables, fruits, and meat, to 1,000 locations.
Sales of grocery items in the second quarter increased by 49.6% compared to the same period last year. The sales growth rates for specific categories were 64% for vegetables, 61% for meat, 28% for fruits, and 13% for seafood.
The rise in foreign customers also boosted convenience store sales. GS25's foreign sales, based on foreign payment methods, increased by 67.2% year-on-year in the second quarter.
Sales of collaborative and differentiated products utilizing intellectual property (IP) such as 'Monchhichi' and 'Jjuyang' also increased. The 'Hyejaroun' product line expanded to include bakery items, resulting in a 20% increase in general bread sales and a 98% rise in health supplement sales.
GS Retail is not only increasing the number of stores but also implementing a 'scrap and build' strategy, which involves expanding existing stores or relocating to prime locations. This strategy aims to enhance profitability per store and broaden the role of convenience stores as a channel for nearby grocery shopping, focusing on fresh food.
The growth of GS The Fresh supermarket was even more pronounced. Second-quarter sales reached 469.8 billion won, a 10.1% increase from the previous year, while operating profit surged 72.2% to 9.3 billion won. By the end of the second quarter, the number of stores had increased by 36 to 596, and the number of customers at existing stores rose by 3.9%.
Quick commerce also continued its growth trend. GS The Fresh's quick commerce sales increased by 49.5% year-on-year in the second quarter, with quick commerce accounting for a record 9.9% of total sales.
GS Shop, the home shopping division, continued to improve its performance by focusing on exclusive products. Second-quarter sales reached 268.2 billion won, a 0.9% increase, while operating profit rose 6% to 26.7 billion won. This marks the third consecutive quarter of improved performance since the fourth quarter of last year.
In the second quarter, GS Shop expanded the number of exclusive products in fashion, beauty, and living categories by 46% compared to the previous year. Brands such as 'Core Authentic,' 'Jason Wu,' and the new underwear brand 'UBGS,' along with private label beauty brand 'VU' and health supplement brand 'Simple Bio,' contributed to sales.
GS Shop has strengthened its sales strategy by connecting TV, mobile, and social media, as well as enhancing specialized sections for fashion, beauty, and food within its mobile app.
A GS Retail representative stated, "The improvement in performance is a result of our focus on enhancing the profitability of individual convenience store locations, improving the condition of existing stores, and increasing operational efficiency."
* This article has been translated by AI.
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