SOUTH KOREA. Shinsegae Duty Free has posted an encouraging return to profit for its second quarter ended 30 June.
Although Q2 turnover was down -10.3% year-on-year to KRW543 billion (US$383.2 million), operating profit was transformed from a KRW1.5 billion loss (US$1.1 million) in the same period last year to a surplus of KRW33.3 billion/US$23.5 million (an improvement of KRW34.8 billion).
The improved Q2 showing boosted first-half operating profit to KRW43.9 billion (up KRW47.8 billion year-on-year), almost US$31 million, with cumulative sales easing -3.0% year-on-year to KRW1.132 trillion.
A Shinsegae Duty Free spokesperson attributed the improved quarterly and half-year performances to a change in strategy.
“By successfully shifting our focus from ‘price-driven competition’ to an ‘experience-oriented’ duty-free model, Shinsegae Duty Free has achieved significant improvements in its business fundamentals and profitability,” the spokesperson commented.
Shinsegae Duty Free noted several key H1 developments and drivers of the enhanced results.
At Incheon International Airport, the retailer successfully drove both premium customer traffic and sales growth by expanding its luxury brand offerings, which now include a new Louis Vuitton duplex store and a Cartier boutique.
At its flagship store in Myeong-dong, Seoul, the news was even better. “Backed by our global membership programmes, overseas partnerships, and highly differentiated merchandising, we saw an explosive influx of international tourists in Q2,” the company said.
Notable growth by nationality included visitors from Thailand (+273%), Australia (+184%), Canada (+93%) and the USA (+22%).
“Moving forward, Shinsegae Duty Free plans to further elevate its competitiveness by strengthening our global luxury brand portfolio and focusing our merchandising strategy around ‘Prestige Beauty’,” the retailer noted.
“We will also continue to enhance the customer experience by expanding our VIP loyalty programmes to include exclusive mobility services, premium dining and cultural performances.”
Parent company Shinsegae’s department store business also benefited from booming inbound tourism. The division’s Q1 and Q2 operating profit grew +31% and +53%, respectively, year-on-year.
Spurred by the strong department store performance, groupwide Q2 consolidated operating profit improved by KRW92 billion over last year to KRW167 billion (US$117.9 million), while the same indicator grew KRW157 billion in the first half to KRW365 billion (US$257.6 million).
Groupwide sales to foreign customers grew by +90% year-on-year in Q1, rocketing to +149% in Q2. In July alone, groupwide sales to international visitors increased +120% year-on-year, representing 8.7% of company revenues.
Looking to Q3, Shinsegae projected strong department sales growth driven by inbound tourist demand and solid VIP sales. ✈
