[Edaily Reporter Kim Kyung-eun] Analysts say that #Shinsegae International’s earnings improvement is accelerating as sales of high-end international brands rise, driven by increased consumer spending power resulting from rising asset values.
Lee Sang-heon, an analyst at iM Securities, stated in a report on the 15th, "We expect Shinsegae International’s earnings improvement to accelerate due to strong sales of global luxury brands."
According to the Ministry of Trade, Industry and Energy, department store sales from January to April this year increased by 13.4%, 25.6%, 14.7%, and 21.7% year-on-year, respectively, and the report explains that the growth rate is steepening, with sales of international luxury brands at department stores during the same period rising by 31.0%, 22.6%, 21.7%, and 38.1% year-on-year, respectively.
He analyzed, "The factors behind this strong sales trend for department stores and their international luxury brands stem from an expansion in consumer spending power driven by rising asset values," adding, "Since the second half of last year, prices of financial assets such as stocks have risen, increasing income from assets beyond labor income. Coupled with the payment of large performance bonuses by some companies, high-end consumption, including purchases of international luxury brands, is expanding."
The analyst noted, “The company holds numerous exclusive domestic licenses and distribution rights for global luxury and contemporary brands such as Brunello Cucinelli, UGG, Chrome Hearts, and Rick Owens,” and predicted, “In an environment of high product unit prices, an increase in sales volume could significantly improve profitability due to the operating leverage effect.”
The analyst added, “Considering the growth trend in sales of famous overseas brands at department stores, the company’s sales of high-end imported fashion are expected to accelerate this year, leading to a substantial improvement in profitability driven by operating leverage and other factors.”