[Edaily Reporter KYUNG GYEYOUNG ] Major fashion companies, which boosted their earnings in the second quarter thanks to a tailwind from department stores, are now highly likely to continue this upward trend in the third quarter. This is because fashion sales at department stores grew even in July—typically considered the seasonal off-peak period—and the number of foreign tourists visiting South Korea is also on the rise.

According to industry sources on the 11th, Shinsegae International ( SHINSEGAE INTERNATIONAL(031430)), which announced its preliminary second-quarter results that day, is estimated to have posted an operating profit of 4 billion won in its fashion division. Although the company recorded a loss in the second quarter of last year due to costs incurred during the transfer of the JAJU brand, it returned to profitability this year.

Sales in the imported fashion division increased by 32% compared to the second quarter of last year. Brands such as Brunello Cucinelli, UGG, Rick Owens, and Erno—which are primarily sold in department stores—as well as newly introduced brands like Enfant Riche Déprimé, Buori, and Courrèges also saw growth. Sales for the company’s in-house brands, Redavison Collections and Ilail, increased by 70% and 34%, respectively, compared to the same period last year.

The three major fashion companies that previously announced their earnings also saw significant improvements in profitability. SAMSUNG C&T CORPORATION(028260) The fashion division recorded an operating profit of 54 billion won, a 64% increase from the second quarter of last year, with the profit margin rising by 2.6 percentage points to 9.1%. HandsomeCorporation(020000), a fashion subsidiary of HYUNDAIDEPARTMENTSTORECO.,LTD, posted an operating profit of 4.6 billion won, up 525.0% from the same period last year, while #KOLON INDUSTRIES’ FnC division recorded an operating profit of 15.8 billion won, an increase of 110.7%.

While the expansion of overseas operations driven by the popularity of K-Culture played a role, the decisive factor in boosting the performance of these fashion companies—which center their business around department stores—was the increase in the number of shoppers visiting department stores. According to the Ministry of Trade, Industry and Energy, department store sales rose 17.4% in the first quarter and 22.9% in the second quarter, respectively, compared to the same periods last year. A HandsomeCorporation official stated, “Strong foot traffic at department stores has sustained the robust growth of both domestic and international brands.”

The upward trend in these fashion companies’ performance is expected to continue into the third quarter, as the fashion divisions of the three major department store chains posted double-digit growth rates. Lotte Department Store saw sales in its Namsung and women’s fashion divisions increase by 10% and 15%, respectively, while Shinsegae Co.,Ltd reported increases of 18% and 16%, respectively. HYUNDAIDEPARTMENTSTORECO.,LTD also recorded a 13% growth rate in its fashion division sales.

The rise in foreign tourists visiting Korea is also a positive factor. According to the Ministry of Culture, Sports and Tourism, the number of foreign visitors to Korea in June reached 1.99 million, a 23.1% increase compared to the same period last year, bringing the cumulative total for the first half of the year to over 10.71 million. Their spending in the first half of the year totaled 10.0389 trillion won, a sharp 50.8% surge compared to the first half of last year.

An industry official noted, “Although there were significant concerns that the upward trend in performance might stall with the arrival of summer—which is typically considered the off-season—sales have continued to rise even in August, particularly at department stores,” adding, “The growing number of foreign tourists visiting Korea is also expected to contribute to improved performance for fashion companies.”