1. What Happened at Shinsegae?

Shinsegae’s first half of 2025 was challenging, marked by a significant loss in its duty-free business and declining department store sales. Revenue decreased by 49%, and operating profit fell by 26%, with the duty-free business significantly impacting the overall decline.

2. Why Did This Happen?

The decline in the duty-free business is primarily attributed to the decrease in tourists after the COVID-19 pandemic, particularly Chinese tourists. Department store performance was also affected by macroeconomic uncertainties, such as high inflation and interest rates, leading to weakened consumer sentiment. However, the department store segment maintained a high operating profit margin, demonstrating its resilience as a core business.

3. What’s Next for Shinsegae?

In the August 26th IR meeting, Shinsegae is expected to announce its turnaround strategy for the duty-free business, plans to strengthen the competitiveness of its department store operations, and its future growth strategy. Further explanation of its shareholder return policy is also anticipated. Investors are particularly interested in hearing concrete answers regarding the duty-free recovery strategy, reducing reliance on the Chinese market, and cost reduction efforts.

4. What Should Investors Do?

Shinsegae’s stock price could fluctuate significantly depending on the content of the IR presentation. Investors should carefully analyze the information presented and make prudent investment decisions considering the uncertainties surrounding the duty-free business and macroeconomic factors. It is essential to assess the company’s long-term growth potential rather than reacting to short-term price fluctuations. Focus on the feasibility of the turnaround strategy presented and the company’s ability to enhance its core business competitiveness.