Core Offline Businesses Drive Shinsegae Siblings to Record Q1; Subsidiary Fortunes Split

[Korea Financial Times, Park seulgi] Shinsegae Group siblings Chung Yong-jin and Chung Yoo-kyung both posted record performances in the first quarter of this year. This was driven by the strengthened competitiveness of their core businesses—Emart’s offline retail operations and Shinsegae’s department store division. However, their subsidiary results were sharply divided. While Chung Yong-jin’s affiliates struggled with sluggish growth, Chung Yoo-kyung’s affiliates saw significant improvements in profitability, providing strong support for the group's consolidated earnings.

According to the Financial Supervisory Service's electronic disclosure on May 14, Emart, led by Chairman Chung Yong-jin, recorded a consolidated operating profit of KRW 178.3 billion in the first quarter, up 11.9% from last year. This is the highest first-quarter operating profit for the company in 14 years since 2012. During the same period, net sales decreased slightly by 1.3% to KRW 7.1234 trillion.

Shinsegae Department Store, led by Chairman Chung Yoo-kyung, posted a consolidated operating profit of KRW 197.8 billion, a 49.5% surge from last year. Net sales increased by 10.9% to KRW 1.8471 trillion. Both figures mark record quarterly highs for the company.
Both executives led these historic earnings by fundamentally strengthening the competitiveness of their core offline retail businesses. Notably, gross sales, which reflect the actual transaction scale and serve as a key metric for offline retailers, showed uniform growth.

On a separate basis (the sum of Emart, No Brand, Traders, and Everyday), Emart’s gross sales rose 1.9% from last year to KRW 4.7152 trillion, while operating profit increased 9.7% to KRW 146.3 billion. Shinsegae’s flagship department store division also achieved record highs with gross sales of KRW 2.0257 trillion (up 13.0%) and an operating profit of KRW 141.0 billion (up 30.7%).

However, the overall performance of their respective subsidiaries told a different story. Chung Yong-jin’s subsidiaries either saw deficits widen or growth stagnate, whereas Chung Yoo-kyung’s subsidiaries experienced clear profitability improvements that boosted overall earnings.

Chung Yong-jin: Subsidiaries Sluggish, Excluding Josun Hotels & Resorts

Emart’s record-breaking performance is interpreted as a direct result of Chairman Chung Yong-jin’s "on-site management." (Cultural Note: In Korean business culture, "on-site management" refers to a hands-on leadership approach where top executives personally visit, inspect, and supervise physical store locations.) Since early this year, Chung Yong-jin has continuously visited major retail sites, such as Starfield Market Jukjeon and Traders Guwol, emphasizing customer satisfaction.
Despite these efforts, the positive effects have not fully extended to the subsidiaries. While the hotel division continued its recovery, core e-commerce, convenience store, and real estate affiliates struggled with slowing profitability and deficit burdens.

Josun Hotels & Resorts recorded a first-quarter operating profit of KRW 3.9 billion, a 116.7% increase from last year, driven by higher occupancy rates and average daily rates (ADR). Net sales grew 2.4% to KRW 168.5 billion.

In contrast, SCK Company (the operator of Starbucks Korea) saw its operating profit decline 17% from last year to KRW 29.3 billion due to rising cost pressures, even though net sales increased 7.3% to KRW 817.9 billion fueled by new store openings.

SSG.COM and Emart24, which have been tasked with improving profitability for several years, remained in the red. SSG.COM’s net sales dropped 9.6% from last year to KRW 322.6 billion, and its operating loss expanded by KRW 3.8 billion to KRW 21.9 billion. Emart24 also reported a 1.6% decline in sales to KRW 458.3 billion, alongside an operating loss of KRW 10.6 billion.

Shinsegae Property posted KRW 99.7 billion in sales (down 4.2%) and KRW 27.0 billion in operating profit (down 26%), largely due to a high base effect from a one-time gain on a real estate disposal last year. Shinsegae Food, affected by the spin-off of its catering division in November last year, saw its sales and operating profit plunge by 13.7% and 57%, respectively.

Gmarket also continued to post an operating deficit but is maintaining an expansionary strategy, carrying out aggressive investments since establishing a joint venture with AliExpress last year.

Chung Yoo-kyung: Profitability Improves Across Most Subsidiaries

On the other hand, subsidiaries under Chairman Chung Yoo-kyung showed a distinct trend of improving profitability. Key sectors such as fashion, duty-free, living, and home shopping all contributed to the robust consolidated performance.

Shinsegae International reported sales of KRW 295.7 billion and an operating profit of KRW 14.8 billion, up 15.7% and 452.6% from last year, respectively. Imported fashion and cosmetics achieved double-digit growth, and in-house brands like Studio Tomboy successfully turned around through operational efficiency and rebranding.

Shinsegae DF (Duty Free) returned to profitability, posting sales of KRW 589.8 billion (up 5.0%) and an operating profit of KRW 10.6 billion. The company explained that focusing on free independent travelers (FIT), improving discount rates, and strengthening K-content led to these results.

Shinsegae Casa achieved KRW 111.4 billion in sales, a 78.8% increase supported by the acquisition of the JAJU business, and maintained its profitable streak with an operating profit of KRW 1.3 billion. Shinsegae Live Shopping and Shinsegae Central also recorded double-digit growth in both sales and operating profit.

An industry official noted, "As offline competitiveness becomes crucial again amid high inflation and an economic slowdown, the profit structure of these subsidiaries will serve as a key variable determining the group's mid-to-long-term stability and overall competitiveness."

Park seulgi (seulgi@fntimes.com)