[Edaily Reporter Kwon Oh Seok ] EUGENE INVESTMENT & SECURITIES released a report on the 20th regarding the outlook for the retail industry, stating, “Perceptions of the retail sector may shift in the fourth quarter,” and adding, “The year-end holiday season effect and expectations for semiconductor performance bonuses are highly likely to stimulate consumer sentiment.” The firm named HYUNDAIDEPARTMENTSTORECO.,LTD(069960) as its top picks and GS Retail(007070)as its second-choice picks.

Lee Hae-ni, an analyst at EUGENE INVESTMENT & SECURITIES, analyzed, “Earnings expectations have been lowered, and stock prices are back to square one. Third-quarter earnings for department stores and convenience stores are expected to fall slightly short of expectations,” adding, “For department stores, the main factor is a slowdown in foreign luxury goods consumption due to the strong won, while for convenience stores, the key factors are a high base caused by the use of consumption coupons last year and a decline in customer traffic due to the August heatwave.”
In contrast, large hypermarkets and supermarkets performed relatively well. This was driven by increased demand for home-cooked meals among domestic consumers due to the stock market plunge and slowing consumption, combined with a low base effect resulting from their exclusion from last year’s consumer coupon program. The analyst explained, “This is the result of large retailers benefiting from the disruption to Homeplus’s operations, while the industry’s overall growth rate actually contracted in July. Duty-free shops saw sluggish revenue growth due to the summer off-season, and profitability also declined as they sold inventory purchased during a period of high exchange rates,” the analyst explained.
Nevertheless, the analyst advised that, for department stores, a strategy of gradually increasing their weight in the portfolio from this point forward would be effective. This is because the slowdown in foreign luxury goods consumption in the third quarter has already been confirmed by a decline in same-store sales growth, and this downward revision in earnings expectations has been largely reflected in stock prices.
He noted, “Domestic demand remains robust as well. Although the growth rate for luxury goods slowed from a monthly average of +34% to +38% in the second quarter to +15.6% in August, clothing (+9.9%) and food (+14.5%) supported growth during the same period, leading to a 10.5% increase in the number of purchases,” he noted, adding, “However, it would be advisable to wait until after assessing consumer sentiment in November and sales figures in December before significantly increasing holdings.”
He continued, “In October, all three companies started off flat to low single digits due to the base effect from last year’s Chuseok holiday, and we expect semiconductor bonus spending to be reflected in department store data in December. He added, “If the same-store sales growth rate for December is confirmed to be at or above the high-single-digit range, it will validate the trend of domestic consumers filling the gap left by foreign tourists, which will serve as a trigger for a stock price rebound.”