Korean convenience stores enjoy robust Q2 earnings

Convenience store chain GS25. [Courtesy of GS Retail]

South Korean convenience store operators posted favorable results for the second quarter on Tuesday despite the worsened business environment as sales grew at new stores.

According to multiple sources from the retail industry on Tuesday, GS Retail Co., operator of convenience store chain GS25, announced that it raised an operating profit of 97.2 billion won ($73.6 million) for the second quarter, up 94.5 percent on year and 108.8 percent on quarter.

Sales jumped 5.3 percent on year to 2.96 trillion won in the second quarter and net profit 19 percent to 53.6 billion won.

Strong performance was led by a boost in profit from its hotel business as well as supermarket and convenience store.

In particular, the company’s convenience store sales jumped 7.1 percent on year to 2.09 trillion won in the second quarter on the back of new store openings.

Operating profit for the April-June period, however, fell 1.7 percent on year to 65.2 billion won.

The decline was attributed to increased depreciation costs due to the opening of new stores, one-time expenditures for consumables, and increased labor expenses.

BGF Retail Co., the operator of the convenience store brand CU, also announced that its second-quarter operating profit stood at 78.1 billion won, up 10.3 percent from the same period a year ago.

Sales also surged 9.4 percent on year to 2.09 trillion won. Net profit rose 3.7 percent to 59.5 billion won.

“The consistent external growth and sales expansion have been achieved despite the challenging business climate,” said an official from the company.

On the other hand, department stores are projected to post dim earnings this week.

Hyundai Department Store Co. posted 55.6 billion won in operating profit in the second quarter, down 21.9 percent from a year ago, on sales of 970.3 billion won, down 13.8 percent. Net profit also fell 52.3 percent to 25.6 billion won.

Shinsegae Co., operator of Shinsegae Department Store, will announce earnings Wednesday and Lotte Shopping Co., operator of Lotte Department Store, on Thursday.

Shinsegae is projected to announce lackluster performance due to the base effect from high growth last year. Shinsegae Department Store is expected to have been affected by the departure of imported brands from Shinsegae International Inc., including Celine and Chloé.

Lotte Department Store is projected to post 2.16 trillion won in sales for the second quarter, up 1 percent from a year ago and 87.9 billion won in operating profit, down 16 percent, according to Park Shin-ae, an analyst at KB Securities Co.