Shinsegae's massive renovation investment has paid off, delivering improved earnings last year. Despite a one-time penalty charge of 148 billion won from partial withdrawal of its duty-free business, the department store division's sharp sales increase in the fourth quarter offset the loss and sustained overall growth momentum.
Shinsegae announced on the 9th that consolidated revenue for last year rose 5.5% year-over-year to 6.93 trillion won. Operating profit edged up 0.6% to 480 billion won. The fourth quarter showed particularly strong recovery. Q4 revenue reached 1.93 trillion won, up 6.2% from the same period a year earlier, while operating profit surged 66.5% to 172.5 billion won.
The department store renovation is credited as the key driver behind the improved performance. Shinsegae Department Store undertook a major renovation of its main branch in Jung-gu, Seoul last year, realigning spaces to fit its "luxury shopping town" strategy. In April, the company officially opened "The Heritage" after renovating the former Cheil Bank building in front of the main branch, and also relaunched the main building as "Shinsegae The Reserve." Following the renovation, the store introduced the world's largest Louis Vuitton store, a Chanel boutique, and the largest Hermès in any Korean department store, significantly strengthening its luxury competitiveness.
Beyond spatial innovation, expanded "House of Shinsegae" intellectual property initiatives and aggressive pop-up store partnerships also proved effective. Foreign customer traffic increased substantially through this process. According to Shinsegae, Q4 foreign customer sales across all 13 department store locations jumped 70% year-over-year, with annual foreign customer sales reaching the 600 billion won range. The department store division's total Q4 sales climbed to 2.15 trillion won, while Q4 operating profit rose to 143.3 billion won.
Shinsegae expects strong performance to continue as foreign customer sales in the department store division keep growing. "High growth centered on luxury goods continues due to wealth effects from rising asset prices," a Shinsegae spokesperson said. "Foreign customer sales are also increasing thanks to growing inbound tourism."
Shinsegae also plans to restructure subsidiaries to lay the groundwork for mid-to-long-term growth. Although Shinsegae Duty Free will withdraw from the DF2 (cosmetics and perfume) zone at Incheon International Airport in April, the company aims to improve profitability by focusing on DF4 (fashion and boutique) and downtown stores. Shinsegae International will concentrate on core fashion and cosmetics businesses, while Shinsegae Casa plans to enhance efficiency in home furnishing operations.
Additionally, Shinsegae confirmed a dividend of 5,200 won per share, up 16% from the previous year, as part of its commitment to achieving value-up targets ahead of schedule. The company is also considering quarterly dividends to improve shareholder cash flow and plans to cancel 200,000 treasury shares (2.1%) within this year.
"Strategic investments made for the future despite a challenging business environment have yielded both quantitative and qualitative growth last year," a Shinsegae spokesperson said. "Building on these strategic investment results, we will continue earnings growth this year through industry-leading change and innovation."