Hyundai Department Store (069960.KS) posted record first-quarter sales in its department store division, driven by strong demand for luxury goods and fashion items as well as a rise in foreign customers. However, the performance gap across business segments widened as its furniture affiliate Zinus continued to struggle.
Hyundai Department Store said in a regulatory filing Tuesday that its department store division recorded net sales of 632.5 billion won ($462 million) in the first quarter, up 7.4 percent from a year earlier. This marks the highest first-quarter sales on record. Operating profit rose 39.7 percent to 135.8 billion won. The year-on-year increase in operating profit widened from 18.3 billion won in the third quarter of last year and 23.7 billion won in the fourth quarter to 38.5 billion won in the first quarter of this year, sustaining a steep upward trend.
The earnings improvement was led by expanded sales of high-margin fashion products. Hyundai Department Store said fashion sales, including winter outerwear, have been rising since the fourth quarter of last year, and profitability improved as consumer spending spread from imported luxury goods to domestic fashion brands. Balanced growth across major product categories including luxury goods, watches, jewelry and fashion also supported the results.
The rise in foreign tourists was another key factor. Foreign customer sales at The Hyundai Seoul surged 121 percent year-on-year in the first quarter. Since its opening through last year, The Hyundai Seoul has drawn visitors from 182 countries. Hyundai Department Store attributed the growth in foreign demand to its experiential space strategy combining shopping with food, beauty and K-content.
"We expect sales across all product categories, including high-margin fashion, to continue expanding in the second quarter, sustaining strong growth," a Hyundai Department Store official said.
On a consolidated basis, however, overall earnings declined due to underperforming business segments. First-quarter consolidated revenue fell 13.5 percent year-on-year to 950.1 billion won, while operating profit dropped 12.2 percent to 98.8 billion won.
Hyundai Duty Free posted operating profit of 3.4 billion won in the first quarter, an improvement of 5.3 billion won from a year earlier, returning to the black. Net sales, however, fell 27.2 percent year-on-year to 213.7 billion won, reflecting the downsizing of its downtown duty-free stores.
"We began operations in the DF2 zone at Incheon International Airport last month, adding to the existing DF5 and DF7 zones and expanding into high-margin categories such as cosmetics and liquor," a Hyundai Duty Free official said. "We expect this to support solid growth going forward."
Zinus's slump deepened amid the global economic slowdown. First-quarter revenue fell 44.2 percent year-on-year to 139.6 billion won, and the company swung to an operating loss of 30.1 billion won. The company said the primary cause of the deterioration was declining mattress demand from U.S. customers amid rising global macroeconomic uncertainty. Zinus plans to pursue earnings recovery through additional ODM orders and reciprocal tariff refunds.
Meanwhile, Hyundai Home Shopping also saw both revenue and operating profit increase in the first quarter, supported by its strategy of expanding sales of luxury accessories and food products. On a standalone basis, net sales rose 4.7 percent year-on-year to 281.3 billion won, while operating profit climbed 9.2 percent to 27.8 billion won.
On a consolidated basis, net sales rose 1.9 percent to 978.5 billion won, while operating profit jumped 35.9 percent to 65.3 billion won. The consolidated results reflect the performance of Hyundai L&C, Handsome and Hyundai Futurenet, with strong results from Handsome and Hyundai Futurenet contributing to the improvement.
"Our programming strategy of strengthening sales of luxury accessories and food products in line with shifting consumer trends proved effective, leading to gains in both standalone revenue and operating profit," a Hyundai Home Shopping official said.
