[Edaily Reporter KIM YOON-JEONG ] Korea Investment & Securities projected that BGF Retail(282330)’s third-quarter operating profit this year will meet market expectations, driven by reduced depreciation expenses and a low base for product profit margins, despite a slowdown in same-store sales growth. The firm maintained its “Buy” investment rating and target price of 185,000 won.

On the 17th, Kim Myung-ju, an analyst at Korea Investment & Securities, projected that BGF Retail’s third-quarter consolidated revenue would reach 2.5226 trillion won, a 2.5% increase year-over-year. Operating profit is expected to rise 10.1% to 107.5 billion won, with an operating margin of 4.3%.
She predicted that same-store sales growth would remain in the 1% range. This is due to the high base for same-store sales in the third quarter of last year—resulting from two rounds of livelihood support payments in July and September—as well as the decline in store traffic caused by the recovery in domestic travelers’ demand for overseas travel in August and September.
Last year, same-store sales growth improved from -2.1% in the second quarter to -0.2% in the third quarter, and reached 2.6% in July of last year. Analyst Kim predicted, “Since the slowdown in same-store growth was largely anticipated, operating profit is expected to meet market expectations.”
While the slowdown in same-store growth compared to the second quarter is disappointing, he believes that the reduction in depreciation expenses seen in the first half of the year will continue into the third quarter, supporting an increase in operating profit. He explained that BGF Retail opened nearly 1,000 stores annually from 2020 to 2023, and as a significant number of those stores are now entering their fifth year of operation, the effect of reduced depreciation expenses is becoming evident this year.
The base effect on merchandise profit margin is also low. In the third quarter of last year, cigarette sales increased by 1.6% year-over-year due to the distribution of livelihood support funds, and the share of cigarette sales rose by 1 percentage point, causing the average merchandise profit margin to decline by 0.5 percentage points. Analyst Kim stated, “Because the base for the merchandise profit margin is low, the merchandise profit margin will not decline year-over-year this year, even though same-store growth is somewhat disappointing.”
He assessed that the potential for further declines in the convenience store sector’s valuation is limited. The market share of the convenience store channel within the retail industry fell from 6.6% in 2022 to 6.2% in 2025. While department stores and online channels have shown stable growth over the past three years, convenience stores—particularly among smaller operators—have seen a decline in store counts, leading to a lower market share within the retail sector. This decline in market share has contributed to lower valuations for convenience store operators, including BGF Retail.
Recently, as the pace of store closures in the convenience store industry has slowed, the potential for further valuation declines is seen as limited. Analyst Kim explained, “The reason the convenience store channel’s market share within the retail industry has declined over the past three years is that while department stores and online channels have shown stable growth, the convenience store channel has experienced a decrease in the number of stores, primarily among smaller operators.” He continued, “Fortunately, it has been confirmed that the pace of store closures within the industry has slowed recently, and accordingly, we believe BGF Retail’s valuation will not decline further,” but added, “Since the total number of stores in the industry has not yet returned to growth, it will take time for valuations to recover.”