SOUTH KOREA. Hotel Shilla, parent company of The Shilla Duty Free, today posted a -77% year-on-year decline in first-quarter travel retail business operating profits to KRW5.9 billion (US$4.3 million). However that performance represented a quarter-on-quarter return to profit after a heavy Q4 2023 loss (see table below).
The Q1 operating profits result came despite a +37% year-on-year increase in revenue to KRW830.7 billion (US$600 million) amid widespread structural changes to the Korean duty-free market.
Downtown duty-free revenue increased by +20% year-on-year and airport sales surged +57%, driven by the accelerating travel recovery. More details and analysis soon.
Commenting on the results, Goldman Sachs Global Investment Research said: “On a monthly basis, domestic duty-free store sales were largely in line with the overall industry trend, with January sales coming in the highest from front-loaded daigou demand ahead of policy restrictions in February, while those of overseas stores were the largest in February from the Lunar New Year during the month.
“Management also noted customer mix within overall duty-free stores improved in Q1 24 thanks to an increasing number of group tourists and non-daigou customers, although the progress is slower than market’s expectations.”
The firm noted that airport sales were up +57% year-on-year from a broad-based traffic recovery across all locations, with the Singapore/Hong Kong/Macau airport passenger numbers (though not spending) recovering to 99%/70%/75% of 2019 levels, respectively. ✈
