SEOUL, Oct. 19 (Korea Bizwire) — Combined sales by South Korea’s retail giants are estimated to have declined more than 2 trillion won (US$1.75 billion) on-year in the first nine months of this year on the fallout of the COVID-19 pandemic, a poll showed Monday.
Industry leader Lotte Shopping and its rivals Shinsegae and Hyundai Department Store are projected to have posted a combined 17.3 trillion won in sales in the January-September period, down 2.2 trillion won from the previous year, according to the survey by Yonhap Infomax, the financial news arm of Yonhap News Agency.
Local retailers have been hit hard by the virus outbreak as people refrain from visiting offline stores and instead resort to online shopping to avoid infection risks.
In particular, the retail giants’ duty-free segment has been battered by the pandemic as the number of customers sharply fell amid disrupted air travel.
Analysts said the retail behemoths probably posted weak earnings in the third quarter as consumer spending remained sluggish, affected by tougher virus curbs.
In late August, the country raised social distancing measures to Level 2 across the nation in its three-tier scheme and applied them for about a month to contain another flare-up in virus cases.
The country’s daily virus cases had been in the triple digits for more than a month since Aug. 14, due largely to a church in northern Seoul and an anti-government rally.
“Local retailers are expected to have posted sluggish earnings in the third quarter, hit by the longest rainy season, the resurgence in virus cases and a fall in the number of Chinese travelers,” Na Eun-chae, an analyst at Korea Investment & Securities, said in a report.
In the January-September period, Lotte Shopping is estimated to have posted an operating profit of 127.2 billion won, down 65 percent from a year earlier, the poll showed.
Lotte Shopping’s operating profit declined 82 percent on-year to 296.7 billion won in the first half. In the second quarter, it swung to a net loss from a year earlier.
Lotte Shopping, the operator of the country’s biggest department store, is seeking to sell 121 of its brick-and-mortar stores, including supermarkets and department stores, within this year in a bid to improve its financial soundness.
Industry watchers said Lotte’s discount stores and home shopping business appeared to fare well, but its department store, movie theaters and online shopping segments still remained sluggish.
No. 2 player Shinsegae is estimated to have logged 12 billion won in operating loss in the first nine months of the year, according to the poll.
In the second quarter, Shinsegae swung to an operating loss of 43.1 billion won from the previous year as its duty-free division was pounded by the virus outbreak.
Smaller rival Hyundai Department Store is projected to have posted 61.7 billion won in operating profit in the January-September period, down 65 percent from the previous year.
“As the country has relaxed its virus curbs since mid-September, offline retailers are seeing some improvement in revenues,” Park Sang-jun, an analyst at Kiwoom Securities, said.
Amid a slowdown in new virus cases, South Korea on Sept. 14 eased tougher anti-virus measures, called Level 2.5, that had been put in place in the greater Seoul area, and it lowered the social distancing level by one notch to Level 1 across the nation last week.