Consumer - Korea: Dept stores- Key beneficiary of strong inbound and wealth effect

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Consumer - Korea: Dept stores- Key beneficiary of strong inbound and wealth effect

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Consumer - Korea

Dept stores- Key beneficiary of strong

inbound and wealth effect

Price Objective Change

Shinsegae- More exposed to int’l inbound 12 May 2026

1Q26 revenue and OP beat expectations. Dept store was strong on 20% SSS growth led Equity

by both int’l travelers and domestic consumption turnaround. DFS profitability was Republic of Korea

better despite an increase in airport concession rent. 2QTD trend looks to be even more Consumer Products

encouraging with Apr SSS growth +26% YoY. Int’l travelers’ revenue contribution at dept

Ahyung Cho >>

store rose to 8.4% in Apr from 6.9% in 1Q and 5.7% in 4Q25. We revise our FY26/27 Research Analyst

EPS estimates by 7%/9%, reflecting higher profitability at the dept store and travel Merrill Lynch (Seoul)

+82 2 3707 0527

retail operation. We raise our PO on Shinsegae to W530k using the same P/E based ahyung.cho@bofa.com

SoTP, applying 11x P/E at the dept store operation, from 9x previously, to reflect solid Zoe (Jung-ae) Chun >>

SSS growth trend led by both inbound and domestic consumption. Our revised PO Research Analyst

Merrill Lynch (Seoul)

implies 12x fwd P/E which is 1STD above its historical average. Reiterate Buy rating. zoe.chun@bofa.com

Lotte Shopping- Dept store operating leverage in place

1Q26 revenue was largely in-line, OP was a beat. Dept store was better than expected

Exhibit 1: Prefer Shinsegaeon profits. 13% SSS growth resulted in a strong operating leverage; dept store OPM PO change

improved 300bps YoY. Homeshopping profits were better on margin focused category

mix shift. Hypermarket was better with tighter cost management. We revise EPS New Old