Seoul: Shinsegae Inc., operator of South Korea's second-largest department store chain, reported a significant decline in its second-quarter net profit, which plunged 85.7 percent year-on-year. The substantial drop was attributed mainly to ongoing investments in facility upgrades.
According to Yonhap News Agency, Shinsegae's net profit for the three months ending June 30 decreased to 8.3 billion won (approximately US$6 million) from 58.07 billion won during the same period last year. The company's regulatory filing also revealed a 35.9 percent decline in operating profit, which fell to 75.3 billion won from the previous year's 117.4 billion won, while sales experienced a modest increase of 5.57 percent, reaching 1.69 trillion won from 1.6 trillion won.
A company spokesperson explained that the continuous facility investments, aimed at enhancing the competitiveness of Shinsegae's core department store business, have impacted the bottom line. Additionally, the duty-free business reported an operating loss, influenced by high airport rental costs and a weakened won, which adversely affected sales.
Despite the current financial challenges, Shinsegae remains optimistic about the future. The company anticipates that its strategic offline facility investments will establish a foundation for mid- to long-term growth, boosting sales and improving profitability. In the latter half of the year, Shinsegae plans to complete a comprehensive renovation of the food court at its southern Seoul department store and launch The Reserve, a fully revamped main store building in central Seoul, in an effort to draw in more customers.
For the first half of 2025, Shinsegae reported a 54 percent decline in net income, which fell to 85.4 billion won from 187.6 billion won the previous year.