SEOUL, Jul. 22 (Korea Bizwire) — South Korean retailers are likely to deliver disappointing earnings for the second quarter on stiff competition with online operators, with industry leader Emart Inc. expected to post the first deficit in its history, industry data showed Monday.
Emart, the country’s largest hypermarket chain, operated by Shinsegae Group, is predicted to have swung into the red during the April-June period, according to various data from brokerage firms.
The company is set to report its second-quarter bottom line early next month.
Emart is expected to report 4.7 trillion won (US$4 billion) in sales for the April-June period but is likely to suffer operating losses due to increased costs, according to Hanwha Financial Investment Co.
Meritz Securities Co. forecast that Emart would report 4.66 trillion won in sales but would suffer losses due to weak sales at its offline outlets and increased costs driven by sales events.
The company earlier announced that its first-quarter consolidated net income plunged 44 percent on-year to 69.7 billion won, while sales climbed 11.7 percent on-year to 4.6 trillion won.
Lotte Shopping Co., another industry leader, is also expected to report a weak performance in the second quarter despite improved sales in its online business.
“Sales are expected to increase 3 percent compared to a year earlier but it is not enough to offset the weak performance of its department store and hyperchain market businesses,” said Park Eun-kyung, an analyst Samsung Securities Co.
Park predicted Lotte Shopping to report 4.48 trillion won in sales for the second quarter, up 1 percent on-year, with operating income estimated at 97 billion won.
Hyundai Motor Securities Co. said it expected Lotte Shopping to reap 4.36 trillion won in sales, with an operating income of 98.4 billion won, lower than earlier forecasts.
Lotte Shopping said operating profit fell 7.1 percent on-year to 205.3 billion in the first three months of the year.