KOSPIRetail & Consumer004170

Shinsegae

₩331,500▼ 0.60%2026-10-02 close

Market Cap

₩3.1T

Turnover

₩16.3B

Volume

50,000 shares

Shares out.

9.5M

PER

19.8×

PBR

0.6×

EPS

₩19,277

Dividend Yield

1.36%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩5,200 per share · Prices as of the 2026-10-02 close

Report overview

Record Profits Meet a Cooling Consumer

A strong core department store business and a duty-free turnaround lifted first-half 2026 operating profit sharply, while cooling consumer sentiment since August and volatile bottom-line results are unfolding at the same time.

1
Second-quarter 2026 consolidated revenue was KRW 1.780 trillion with operating profit of KRW 167.1 billion, pushing the operating margin above 9% on filed figures, more than double the KRW 75.3 billion posted in the second quarter of 2025.
2
The company said first-half 2026 consolidated gross sales reached KRW 6.3558 trillion with operating profit of KRW 365.0 billion, its best half-year on record, while the department store division posted second-quarter gross sales of KRW 2.017 trillion, up 15.5% year on year.
3
Duty-free unit Shinsegae DF swung to a KRW 33.3 billion operating profit in the second quarter of 2026, with the April 28, 2026 exit from Incheon Airport's DF2 zone cited as cutting annual rent by roughly KRW 100 billion.
4
Operating profit and net profit attributable to owners have diverged widely: 2025 operating profit was KRW 480.0 billion but owners' net profit only KRW 13.9 billion, and the fourth quarter of 2025 showed a KRW 76.5 billion owners' net loss despite KRW 172.5 billion of operating profit.
5
Industry indicators are mixed: Shinsegae's monthly department store sales growth eased from 24.8% in February 2026 to 16.5% in May, 14.4% in June and 14.2% in July, while the August consumer sentiment index fell 2.3 points month on month.

Business structure

Shinsegae runs department stores as its core business while consolidating duty-free, fashion, mixed-use property, furniture and home-shopping subsidiaries.

Directly operated stores include the Myeongdong main store, Gangnam and Centum City, while Gwangju, Daegu and Daejeon Shinsegae operate as separate legal entities that are aggregated in divisional reporting.

Second-quarter 2026 department store gross sales were KRW 2.017 trillion with operating profit of KRW 108.8 billion, on a basis that combines the separate Gwangju, Daegu and Daejeon entities.

In the same quarter, duty-free operator Shinsegae DF posted revenue of KRW 542.6 billion and operating profit of KRW 33.3 billion; Shinsegae Central revenue of KRW 108.7 billion and operating profit of KRW 14.9 billion; Shinsegae Casa revenue of KRW 119.2 billion and operating profit of KRW 2.4 billion; and Shinsegae Live Shopping revenue of KRW 86.8 billion and operating profit of KRW 5.2 billion.

Fashion and cosmetics arm Shinsegae International grew second-quarter revenue 15.1% to KRW 291.6 billion, with the cosmetics division at a record quarterly KRW 129.5 billion.

The merchandise mix is skewed toward large flagship stores with a high luxury share, and large-store renovations plus a high luxury sales weighting are cited as the drivers of top-line growth. On the customer side, new customers accounted for 27.7% of first-half 2026 sales, of which 45% were aged 30 or younger.

Competition is a three-way contest with Lotte and Hyundai Department Store, where the ability to capture luxury and inbound demand varies by store location.

On assets, Shinsegae Central, a subsidiary of Shinsegae, is one of the landowners of the 146,260.4 square meter Seoul Express Bus Terminal site and holds a 70.49% stake in Seoul Express Bus Terminal Co.

Earnings trend

Quarterly revenue · Operating profit

₩1.7T₩75.3B25Q2₩1.6T₩99.8B25Q3₩1.9T₩172.5B25Q4₩1.8T₩197.8B26Q1₩1.8T₩167.1B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩7.8T₩645.4B2022₩6.4T₩639.8B2023₩6.6T₩477B2024₩6.9T₩480B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.7T	₩75.3B	4.4%
2025Q3	₩1.6T	₩99.8B	6.1%
2025Q4	₩1.9T	₩172.5B	8.9%
2026Q1	₩1.8T	₩197.8B	10.7%
2026Q2	₩1.8T	₩167.1B	9.4%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩7.8T	₩645.4B	₩406.1B	8.3%	9.9%	129.5%
2023	₩6.4T	₩639.8B	₩225.1B	10.1%	5.3%	132.7%
2024	₩6.6T	₩477B	₩107.8B	7.3%	2.5%	136.4%
2025	₩6.9T	₩480B	₩13.9B	6.9%	0.3%	140.9%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On filed figures, annual revenue fell from KRW 7.8128 trillion in 2022 to KRW 6.3571 trillion in 2023, then recovered to KRW 6.5704 trillion in 2024 and KRW 6.9295 trillion in 2025.

Operating profit was KRW 645.4 billion in 2022 (8.3% margin), KRW 639.8 billion in 2023 (10.1%), KRW 477.0 billion in 2024 (7.3%) and KRW 480.0 billion in 2025 (6.9%), a downward margin path.

Net profit attributable to owners, however, shrank from KRW 406.1 billion in 2022 to KRW 225.1 billion in 2023, KRW 107.8 billion in 2024 and KRW 13.9 billion in 2025, widening the gap versus operating results.

Quarterly, the profit base clearly stepped up from KRW 1.694 trillion of revenue and KRW 75.3 billion of operating profit in the second quarter of 2025 to KRW 1.934 trillion and KRW 172.5 billion in the fourth quarter of 2025, KRW 1.847 trillion and KRW 197.8 billion in the first quarter of 2026, and KRW 1.780 trillion and KRW 167.1 billion in the second quarter of 2026, with operating margins in the 9-10% range for both 2026 quarters.

Owners' net profit also moved from a KRW 2.3 billion loss in the second quarter of 2025 to KRW 120.2 billion and KRW 90.1 billion in the first two quarters of 2026, yet the fourth quarter of 2025 recorded a KRW 76.5 billion owners' net loss despite KRW 172.5 billion of operating profit, showing how wide non-operating swings can be.

A sizable non-controlling interest share of consolidated profit, reflecting the subsidiary and affiliate ownership structure, further amplifies volatility in owners' earnings. The company attributes the improvement to both the core business and subsidiaries.

The 15.5% rise in second-quarter department store gross sales and 53.5% gain in divisional operating profit were linked to investment in the main and Gangnam stores plus broad category growth in luxury (35%), living (16.6%), food (13.7%) and fashion (10.1%), while duty free saw operating profit improve by KRW 34.8 billion year on year as independent traveler sales rose, downtown discount rates fell and the Incheon Airport DF2 operation ended.

On cash flow, 2025 operating cash flow rose to KRW 990.6 billion from KRW 775.8 billion in 2024, while total liabilities of KRW 9.2610 trillion left the debt-to-equity ratio at 140.9%, up from 129.5% in 2022.

Industry analysis

Department stores clearly outgrew other retail formats in the first half of 2026. Ministry data showed first-half offline sales at major retailers up 6.2%, with department stores up 20.1%, while hypermarkets fell 7.3% and super-supermarkets 6.6%. Inbound tourism and luxury spending were the engines.

Growth in imported prestige brand sales stayed in the 20-30% range through all six months. Recent data, however, point to a possible peak.

Lotte's growth slowed from 20% in May and June to around 15% in July and August; Shinsegae's monthly department store growth eased from 24.8% in February to 16.5% in May, 14.4% in June and 14.2% in July; and Hyundai decelerated from 21% in May to about 8% in August.

The Bank of Korea's consumer sentiment index fell 2.3 points month on month to 104.5 in August, and the previously rising housing price outlook also turned down, prompting the view that the overall wealth effect has entered a slowdown phase.

In competitive positioning, Shinsegae's portfolio of large stores with high luxury and foreign customer weightings makes it relatively more sensitive to inbound and high-end spending than its two peers.

A credit rating perspective also noted that while rising foreign visitor numbers should aid department stores and mixed-use malls, structural weakness in domestic consumption will not be easy to overcome.

In duty free, the restructuring of Incheon Airport concession terms remains the key swing factor for sector profitability.

Outlook

Management's stated second-half plan centers on strengthening store content. It said it will sequentially open an imported luxury designer apparel hall at Daegu Shinsegae, a women's fashion hall at the Hanam store and the Hyper Ground concept at Cheonan-Asan to reinforce store competitiveness.

The company also said it would continue operational efficiency and specialization efforts. In duty free, easing downtown competition has improved discount rates, and the April 28 exit from Incheon Airport's DF2 zone is cited as saving roughly KRW 100 billion of annual rent.

On the asset side, the Seoul city government and Shinsegae Central City are in working-level talks aiming to complete pre-negotiation on the Seoul Express Bus Terminal mixed-use development within the year, with the plan calling for the 1975-built Gyeongbu, Yeongdong and Honam terminals to be consolidated underground and modernized.

Public contributions from the project are estimated at around KRW 2 trillion. Brokerage views diverge.

Heungkuk Securities said in an August 2026 report that it maintained a buy rating while cutting its target price to KRW 660,000 from KRW 930,000, and Daishin Securities said on August 11, 2026 that it maintained a buy rating and a KRW 1,000,000 target price.

Hana Securities, by contrast, judged that the equity market slump feeding into August consumer sentiment, together with a reversal in a four-month rise in housing price expectations, is inevitably negative for the department store channel.

Valuation

PER

19.8×

PBR

0.6×

ROE

3.4%

EPS

₩19,277

BPS

₩616,158

Dividend per share

₩5,200

When looking at earnings-based multiples, the composition of the measurement window matters. Owners' net profit over the most recent four quarters still includes the fourth-quarter 2025 net loss, so unlike the recovery in operating profit, net-income-based multiples screen relatively higher.

On an asset basis, by contrast, the shares trade below book value per share, and it is worth noting that self-calculated and exchange-published book value figures differ. The dividend is paid on a quarterly schedule, and the second-quarter 2026 payout was set at KRW 1,300 per common share with an August 31 record date.

On shareholder returns, confirmed facts include the cancellation of 200,000 treasury shares in the first quarter and treasury holdings of 7.2%, the largest among retailers, alongside a brokerage report that remaining treasury shares are to be cancelled in stages.

In short, the direction of profit recovery, bottom-line volatility and asset-related events all bear on the multiples at once, so conclusions differ depending on which metric is used.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Step-up in core earnings power

Filed figures show operating profit of KRW 197.8 billion in the first quarter of 2026 and KRW 167.1 billion in the second, far above the KRW 75.3 billion of the second quarter of 2025. Quarterly operating margins moved into the 9-10% range, above the 6-7% annual level of 2024-2025.

The company said renovations of key stores such as the main and Gangnam stores plus content differentiation drove a 15.5% rise in department store gross sales and a 53.5% gain in divisional operating profit. With a largely fixed cost base, incremental sales pass through to margin more strongly in this business.

Restructured duty-free P&L

Shinsegae DF swung to a KRW 33.3 billion operating profit in the second quarter of 2026 from a KRW 1.5 billion loss a year earlier even as revenue fell 10.3%, and first-half operating profit of KRW 43.9 billion marked a KRW 47.8 billion improvement.

Expanded luxury brands at the Incheon Airport store and more foreign visitors at Myeongdong were cited as profitability drivers. On top of that, the April 28 exit from the Incheon Airport DF2 zone is cited as cutting annual rent by roughly KRW 100 billion. The unit has visibly pivoted toward improving profit while shrinking revenue.

Gangnam terminal development process advancing

The landowners of the Seoul Express Bus Terminal mixed-use project are Shinsegae Central and Seoul Express Bus Terminal Co., with Shinsegae's subsidiary Shinsegae Central holding a 70.49% controlling stake in the terminal company.

The plan is to relocate and consolidate the terminal underground on the 146,000 square meter site and build an above-ground complex weighted 35% office, 28% retail, 16% residential, 8.5% lodging and 5% cultural.

The city said it would complete pre-negotiation within the year and then begin urban management plan changes and construction permitting. As the process advances, disclosure around the property assets becomes more concrete.

Bear factors

Decelerating growth signals

Shinsegae's monthly department store sales growth slipped from 24.8% in February 2026 to 16.5% in May, 14.4% in June and 14.2% in July. Analysts described growth as peaking around 20% in May and falling quickly, having been boosted by rising foreign visitor numbers and a booming equity market.

Growth in imported prestige brand sales, which make up roughly 37% of department store revenue, is also trending lower. How growth holds up against tougher comparisons in the second half is the key question.

High volatility in owners' net profit

Operating profit for 2025 was KRW 480.0 billion, yet owners' net profit was only KRW 13.9 billion, and the fourth quarter of 2025 produced a KRW 76.5 billion owners' net loss despite KRW 172.5 billion of operating profit.

Of KRW 64.6 billion in 2025 consolidated net profit, just KRW 13.9 billion accrued to owners, reflecting a large minority interest. Non-controlling interests account for KRW 2.1170 trillion of KRW 6.5724 trillion in total equity. How much operating-level improvement reaches owners' earnings varies widely by quarter.

Reliance on wealth effects and a sentiment reversal

Analysts noted that first-half department store growth came mainly from rising foreign visitors and equity wealth effects, and judged that the market slump feeding into August sentiment plus a reversal in four straight months of rising housing price expectations is negative for the channel.

The Bank of Korea consumer sentiment index fell 2.3 points month on month to 104.5 in August. A store mix weighted toward luxury and high-end spending raises sensitivity to asset price swings. Inbound demand likewise depends on exogenous factors such as exchange rates and tourism policy.

Risk factors

Financial structure

Total liabilities stood at KRW 9.2610 trillion at end-2025 with a debt-to-equity ratio of 140.9%, up each year from 129.5% in 2022, 132.7% in 2023 and 136.4% in 2024.

Given continuing capital expenditure on store renovations and mixed-use development, changes in interest rates and funding conditions can affect earnings. Operating cash flow rose to KRW 990.6 billion in 2025, but priorities for cash allocation could shift once large-scale development begins in earnest.

Regulation and permitting

Development of the terminal site runs through a pre-negotiation framework in which the developer and the city agree in advance on zoning upgrades and the scale of public contributions. With public contributions estimated at around KRW 2 trillion, project terms could shift depending on the negotiation outcome.

Delays, changed conditions or slipping permit timelines can open a gap between asset-related expectations and actual progress. In duty free, policy and contractual variables around airport concession terms also remain.

Demand and competition

With polarized consumption concentrating department store spending in luxury and premium fashion, a credit rating analyst judged that structural weakness in domestic demand will be hard to overcome.

It was also noted that luxury price hikes and an extra holiday in the prior month inflated growth rates, so their absence could lower reported growth. Competition with Lotte and Hyundai on renovations and luxury tenant acquisition carries selling, administrative and depreciation costs. Among subsidiaries, Live Shopping is an example where channel investment costs weighed on profit.

What to watch next

Late September 2026
A point to check gift certificate and gift set demand around the Chuseok holiday. Department stores benefit relatively more from post-holiday gift certificate spending, so the timing of Chuseok in September was flagged as a swing factor for monthly sales.
Late September to late October 2026
Monthly retail sales data from the trade ministry for August and September, plus the Bank of Korea consumer sentiment index, will show whether department store growth keeps decelerating and whether August's sentiment drop was temporary.
November 2026
Third-quarter 2026 results are expected. Watch whether department store operating margins hold the 9-10% range seen in the first half, whether duty free stays profitable, and whether operating profit and owners' net profit diverge again as they did in the fourth quarter of 2025.
Fourth quarter 2026
Whether the Seoul city government and Shinsegae Central City conclude pre-negotiation on the Seoul Express Bus Terminal site within the year, and on what public contribution terms, is the item to verify. The outcome will define the timeline for urban plan changes and permitting.
Fourth quarter 2026 to early 2027
Key items are the sequential openings of the imported luxury designer hall at Daegu Shinsegae, the women's fashion hall at Hanam and Hyper Ground at Cheonan-Asan, plus whether the staged cancellation of remaining treasury shares proceeds. Because renovations also raise depreciation, sales contribution and cost increases should be assessed together.

Overall view

Shinsegae's filed operating profit rose to KRW 197.8 billion in the first quarter of 2026 and KRW 167.1 billion in the second, far above the KRW 75.3 billion of the second quarter of 2025, with quarterly operating margins moving into the 9-10% range.

According to the company, department store gross sales and the duty-free, fashion and mixed-use property subsidiaries improved simultaneously to produce a record half-year.

That said, 2025 operating profit of KRW 480.0 billion translated into only KRW 13.9 billion of owners' net profit and the fourth quarter of 2025 posted a net loss, so how much operating improvement reaches owners' earnings needs quarter-by-quarter verification.

On the industry side, the strong 20.1% first-half growth in department store sales coexists with decelerating growth at all three players since July and August and a decline in consumer sentiment.

On assets, pre-negotiation for the Seoul Express Bus Terminal site is targeted for completion within the year, and details should firm up as the process advances. Brokerage target prices moved in both directions in August, showing that differences center more on applied multiples than on earnings estimates.

In sum, evidence of profit improvement and evidence of slowing growth sit side by side, and the checkpoints above offer a sequence for verifying which prevails. This material is for information purposes only and contains no buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.