Department Stores- More attractive for longer

Research evidence excerpt

Department Stores- More attractive for longer

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Consumer - Korea

Department Stores- More attractive for

longer

Price Objective Change

Two strong pillars- Wealth effect and inbound tourism 01 July 2026

Korea dept store industry is experiencing an unprecedented upcycle driven by two major Equity

pillars, wealth effect and int’l inbound travelers’ spending. YTD industry’s average traffic Republic of Korea

growth of ~10% is primarily explained by Korean consumers (~75% of the growth). The Consumer Products

average value per purchase also rose ~9%, on the increasing revenue share by the int’l Ahyung Cho >>

travelers’ revenue whose basket size is higher than that of Koreans’. Int’l travelers’ Research Analyst

spending at dept stores has been growing triple digit YoY. By category, luxury is showing Merrill+82 2 3707Lynch0527(Seoul)

the strongest growth at 30%+. We forecast this positive momentum to last for longer, ahyung.cho@bofa.com

and forecast 15% 2Y CAGR, at a much more elevated level than 10Y average of 3%. Zoe (Jung-ae) Chun >>

Research Analyst

Merrill Lynch (Seoul)

zoe.chun@bofa.comTraffic and basket size equally robust

Historically, when traffic growth was strong, blended basket size growth was slow. This

is because, incremental traffic growth used to from the mass customers vs VIP

customers. This time, we expect an equal contribution, given the sharply rising int’l Exhibit 1: Revise Shinsegae PO to W900k

travelers’ contribution. Following at 17% revenue growth in FY26, we anticipate the PO change

industry to grow at ~15% (managerial accounting basis) in FY27E. While foot traffic OLD NEW

growth would decelerate, 1) as of 1Q26, foot traffic on absolute basis is ~16% below Shinsegae 530,000 900,000

2017 peak.