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While the large-cap semiconductor stocks that had led the domestic market took a breather, department store shares surged double digits during intraday trading on the 4th. Buying interest flowed in amid growing expectations that the "wealth effect" from rising asset prices, such as stocks and real estate, could translate into a recovery in high-end consumption.
According to the Korea Exchange, as of 1:34 p.m. that day, Shinsegae (004170) was trading at 659,000 won, up 90,000 won (15.82%) from the previous session. It rose as high as 660,000 won during the session, setting a new high. Hyundai Department Store (069960) was up 17,000 won (13.96%) at 138,800 won, while Lotte Shopping (023530) rose 17,800 won (11.55%) to 171,900 won.
Analysts say the simultaneous rise in department store shares, even as the KOSPI weakened during the session, reflects a strong rotational buying character. While large-cap semiconductor and artificial intelligence (AI) stocks recently led the domestic market's gains, the burden of short-term sharp rises grew, prompting buying interest to shift to relatively underperforming consumer stocks.
The department store sector is considered a leading consumer play expected to benefit during phases of rising asset prices. When stock and real estate prices climb, consumer sentiment among high-income earners improves, and sales in high-margin categories such as luxury goods, fashion, and jewelry can increase. The rise in foreign visitors to Korea is another factor boosting expectations for improved department store earnings.
Brokerages are also raising their outlook on the department store sector. NH Investment & Securities analyzed that the area drawing the most investor interest among consumer sectors is one where sales gains are expected on both the department store and duty-free fronts, driven by the wealth effect and an increase in foreign visitors. In particular, it forecast Shinsegae's consolidated operating profit at 735.5 billion won in 2026, projecting a record performance.
For Hyundai Department Store, improving profitability in its core business and a turnaround to profit in its duty-free segment are both drawing attention. Leading Investment & Securities assessed that Hyundai Department Store's department store division posted double-digit transaction value growth in the first quarter, with high-margin categories such as luxury goods, watches and jewelry, and fashion growing simultaneously. It also noted that the foreign sales proportion rose to the 6% range in the first quarter, and that April's growth rate is understood to have expanded to around 40%.
Lotte Shopping's share gains are likewise supported by expectations for a department store recovery. Samsung Securities analyzed that Lotte Shopping's first-quarter consolidated operating profit of 252.9 billion won exceeded consensus by 22%, with department store same-store sales growth of 13% leading the company's overall results. Samsung Securities expects the strong department store performance, driven by high foreign sales growth, to continue for some time.
However, the burden from the short-term sharp rise is a variable. Department store shares have climbed steeply in recent days, rapidly pricing in the wealth effect and expectations for an inbound consumption recovery. An official in the financial investment industry said, "Whether the recovery in high-end consumption actually translates into earnings, and whether the profit improvement at duty-free operations and subsidiaries continues, will be the key to further gains."
