Shinhan Investment Corp. announced on September 11 that it is maintaining its target price of 700,000 won and a "buy" rating for Shinsegae, citing strong performance in the department store sector.
In a report released that day, analyst Jo Sang-hoon noted, "The renewal of large stores and a higher proportion of luxury sales compared to competitors have significantly contributed to growth."
Jo pointed out that the strong performance of the department store sector in the first half of the year was driven by rising asset prices and a surge in foreign sales. However, he also mentioned that recent stock market volatility and concerns over the strengthening won have led to a decline in share prices.
Despite market concerns, the department store's performance remains solid. Jo stated, "The performance indicators (transaction growth rates of +24% in July and +15% in August) are favorable," adding that the improvement in sales mix is also positive. He noted that while growth has slowed due to a high base in luxury sales and a decline in sales following major electronics events in June and July, the high-margin fashion sector has begun to recover since June.
Furthermore, Jo assessed that the impact of the recent rapid appreciation of the won on performance has been minimal. He explained, "The structural growth in inbound sales has increased the attractiveness of department store channels. Although the rapid strengthening of the won has raised duty-free cost ratios, the improvement in purchasing power among domestic tourists, who account for 70% of individual tourists, has offset this effect."
* This article has been translated by AI.
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