Three Department Store Chains Post Strong Third-Quarter Results, Raising Hopes of Record Annual Sales

[Financial News]  The three department store operators all posted strong results in the third quarter of this year, buoyed by increased shopping demand as the number of foreign tourists rose. With growth in their results expected to continue in the fourth quarter, the year-end peak season, hopes are growing that all three will set new records for annual sales.
According to the department store industry on the 10th, Lotte Department Store, the industry leader, posted sales of 808.1 billion won in the third quarter of this year, its highest quarterly sales on record. That was up 5.7% from the same period a year earlier. Operating profit for the same period rose 35.7% to 112.9 billion won from 83.2 billion won a year earlier.
Shinsegae Department Store and Hyundai Department Store also continued to improve their results, with significant increases in sales and operating profit. Shinsegae Department Store's sales in the third quarter of this year rose 10.7% to 689.2 billion won from 622.7 billion won a year earlier. Operating profit for the same period increased 23.5% to 103.7 billion won from 84 billion won a year earlier. Hyundai Department Store also posted sales of 614.5 billion won and operating profit of 114.1 billion won in the third quarter, up 6.5% and 27.8%, respectively, from the same period a year earlier.
Accordingly, all three department store operators recorded year-on-year increases in cumulative sales and operating profit. Lotte Department Store's cumulative sales and operating profit from the first through third quarters of this year were 2.5716 trillion won and 423.8 billion won, respectively, both higher than a year earlier. Over the same period, Shinsegae Department Store recorded cumulative sales of 2.1686 trillion won and operating profit of 353.6 billion won, while Hyundai Department Store posted cumulative sales of 1.8908 trillion won and operating profit of 360 billion won; both companies also saw year-on-year increases in both figures.
The department store industry's strong results have been driven by increased shopping demand as the number of foreign tourists has risen. According to the Ministry of Culture, Sports and Tourism, the cumulative number of foreign tourists visiting Korea this year had surpassed 18.94 million as of the 27th of last month, setting a new record. It surpassed last year's full-year visitor count about two months earlier than last year's total was reached. The ministry expects the number of foreign tourists visiting Korea this year to exceed 20 million for the first time ever.
The rise in foreign tourists has also translated into growth in department stores' sales to foreign customers. Lotte Department Store surpassed 1 trillion won in annual sales to foreign customers early last month, becoming the first in the industry to do so, and expects those sales to top 1.3 trillion won this year. Sales to foreign customers at Shinsegae Department Store and Hyundai Department Store are also rising rapidly, and each is expected to exceed 1 trillion won within the year.
This has also raised expectations for department stores' fourth-quarter results. Although growth in domestic consumption has slowed somewhat, spending by foreign tourists continues, and the year-end peak season is approaching, prompting forecasts that the improvement in results will continue.
In particular, as fourth-quarter sales typically exceed those in the third quarter, some expect all three department store operators to set new records for annual sales this year. The fourth quarter is considered the industry's peak season, as sales of higher-priced fall and winter clothing get into full swing and year-end shopping demand concentrates around major discount events and Christmas, making it the time of year when sales are highest.
Lotte Department Store's record for annual sales is 3.3033 trillion won, set in 2023, and based on this year's cumulative sales, it has just 731.7 billion won left to reach that mark. Shinsegae Department Store and Hyundai Department Store also set records last year, with sales of 2.6747 trillion won and 2.4377 trillion won, respectively. As both companies have continued to grow sales this year, they could surpass last year's figures again, depending on their performance during the year-end peak season.
An industry official said, “Growth has slowed somewhat compared with the first half, but we are still seeing a better trend than a year earlier.” The official added, “The fourth quarter is the department store industry's peak season, and with various year-end discount events and Christmas displays expected to draw shoppers, the current outlook suggests we will also post solid results in the fourth quarter.” 
[email protected] Jang Yu-ha Reporter