BGF retail

BGF Retail is the franchisor of the CU convenience store chain, and its core model is sourcing goods for franchised stores and collecting royalties.

The CU convenience store business accounts for roughly 98% of consolidated revenue, and the company itself notes that parent-only revenue is typically about 98% of the consolidated figure.

For the first half of 2026, CU reported parent-only revenue of 4.4424 trillion won and operating profit of 114.7 billion won, while GS Retail's convenience store division (GS25) posted 4.4707 trillion won of revenue and 92.7 billion won of operating profit, leaving GS25 ahead on sales and CU ahead on profit in a very tight race.

CU's store count rose from 17,762 in 2023 to 18,458 in 2024 and 18,711 in 2025.

On the merchandise side, a falling share of tobacco and a rising share of food and processed food have been lifting the average product margin, with private labels PBICK and Heyroo, the PBICK The Kitchen ready-meal line and dessert series serving as differentiation levers.

In the second quarter of 2026, grocery-type categories such as side dishes, cheese and ham grew 18.2% year on year, showing the near-home grocery strategy in numbers.

Delivery and quick commerce are expanding through outside platforms including Naver and Coupang Eats, with CU delivery sales up 91.6% from January to April 2026.

Overseas, the company operates via master franchise agreements in Mongolia, Malaysia, Kazakhstan and Hawaii, but industry analysis puts overseas sales at only a low single-digit share of the total, so the earnings impact remains limited.

Competitively it is a two-horse race with GS25, while Seven Eleven and Emart24 remain behind on both store count and profitability.

On an annual basis, revenue rose for four consecutive years: 7.6158 trillion won in 2022, 8.1948 trillion in 2023, 8.6988 trillion in 2024 and 9.0612 trillion in 2025.

Operating profit, however, was essentially flat at 252.4 billion, 253.2 billion, 251.6 billion and 253.9 billion won, so the operating margin fell every year from 3.3% to 3.1%, 2.9% and 2.8%.

Net profit attributable to owners also barely moved, from 193.5 billion won in 2022 to 195.3 billion won in 2025, suggesting a stretch in which top-line expansion did not fully translate into profit.

Quarterly figures show clear peak-season leverage in the third quarter of 2025, with revenue of 2.4622 trillion won and operating profit of 97.6 billion won (a 4.0% margin), before the fourth quarter reverted to 2.2924 trillion won and 64.3 billion won (2.8%).

In the seasonally weakest first quarter of 2026, revenue of 2.1204 trillion won and operating profit of 38.1 billion won took the margin down to 1.8%.

The second quarter of 2026 then delivered revenue of 2.4268 trillion won, operating profit of 84.9 billion won and net profit attributable to owners of 56.8 billion won, restoring the margin to 3.5%.

Management cited fewer rainy days and higher average temperatures, recovering consumer sentiment, the effect of fuel-price relief payments and more inbound tourists, and said results beat market expectations even after one-off costs such as franchisee compensation tied to the April cargo union logistics strike.

Same-store sales growth swung from minus 2.1% in the second quarter of 2025 to plus 4.2% in the second quarter of 2026 with customer counts up 3.0%, while quarterly sales to foreign customers jumped 60.1% year on year.

On the balance sheet, 2025 operating cash flow reached 770.8 billion won, roughly three times operating profit given lease accounting, while equity stood at 1.3131 trillion won against total liabilities of 2.2431 trillion won, taking the debt-to-equity ratio down from 206.1% in 2022 to 170.8% in 2025.

The prevailing view is that Korea's convenience store industry has entered a mature phase of its cycle.

Ministry of Trade, Industry and Energy data show the four major chains shrinking from 54,852 stores in 2024 to 53,266 in 2025, the first annual net decline since the format arrived in 1988, while combined sales growth slowed from 8.0% in 2023 to 3.9% in 2024 and 0.1% in 2025.

With Korea's store count approaching that of Japan (57,019 stores) despite Japan having roughly twice the population, analysts argue that pure store-opening competition has hit its limit.

Conversely, per-store efficiency has been improving after the shakeout: in the first quarter of 2026 GS Retail's convenience store operating profit rose 23.8% to 21.3 billion won and BGF Retail's consolidated operating profit rose 68.6% to 38.1 billion won.

Industry indicators also turned up, with average convenience store sales growth improving from 2.7% in January to April 2026 to 5.9% in May and 5.1% in June according to the ministry's retail sales survey.

That recovery, however, blends in temporary drivers such as extreme heat, inbound tourism and government relief payments, so durability still needs confirmation.

On positioning, CU leads on store count and operating profit while GS25 leads on revenue and fresh-food expansion in a very close race; Seven Eleven turned a quarterly profit in the first half of 2026 for the first time in eleven quarters, and Emart24 is still narrowing losses.

The Korea Chamber of Commerce and Industry has said the sector faces the limits of volume growth, with both store counts and customer counts falling together for the first time since the format emerged, and pointed to overseas expansion as a necessary avenue.

For 2026 the company set out a management keyword, FASTER, combining product differentiation (Frontier), overseas expansion (Abroad), social role (Station), retail tech upgrades (Tech-driven), larger stores (Enlarge) and faster service (Rapid).

Domestically it plans to use stores of 100 square meters or more as local hubs for specialty categories such as beauty and health supplements, while segmenting customers through grocery-focused stores, smart grocery formats and outlets tailored to foreign residents and tourists.

Overseas, CU passed 800 global stores during 2026 and has targeted more than five countries and up to 1,200 stores by 2028, including 50 stores in Hawaii within three years and 500 stores in each existing market.

In logistics, a Busan distribution center backed by roughly 220 billion won is under construction with completion targeted for the fourth quarter of 2026; at about twice the size of the existing central center, it is designed to double as an export hub supplying Mongolia, Malaysia and Kazakhstan.

On exports, the company says its export product range widened from about 50 items in 2019 to roughly 1,000 recently, with export value rising from one million dollars in 2019 to more than ten million dollars in 2025.

On costs, the 2027 minimum wage was fixed at 10,700 won per hour, a 3.7% increase, and sector-specific differentiation was again voted down, keeping franchisee labor costs and headquarters support spending in focus.

As for brokerage views, Daishin Securities said in a May 8, 2026 report that same-store sales growth was recovering after the 2024-2025 industry shakeout and maintained a buy rating with a target price of 170,000 won, while Korea Investment & Securities maintained a 165,000 won target price on June 19, 2026 and said the retail sector's investment priority had slipped behind department store operators' stronger results.