Rain, COVID-19 Have Adverse Impact in August
The author is an analyst of KB Securities. She can be reached at shinay.park@kbfg.com. -- Ed.
August SSSG outlook: Rain, COVID-19 have adverse impact
August had one more weekend day/holiday than it did last year. However, this was countered by rain that limited outdoor activity until mid-month and a high base from gift set sales for the Chuseok holiday (Oct 1 in 2020 vs. Sep 13 in 2019).
1) Department Store: We expect SSSG between -8% and 0% YoY. Sales grew YoY during the first half of the month but then reversed course with a double-digit drop following an upturn in confirmed cases of COVID-19 on August 18.
2) Hypermarket: We estimate SSSG between -1% and -2% YoY. Actual SSSG is projected at 1-2%, as the absence of a Chuseok holiday boost should negate the extra holiday YoY, pushing SSSG down 3pp. The resurgence of the pandemic will be positive for hypermarkets, as less people dining out means more demand for groceries.
3) Convenience Store: We estimate SSSG at -4% YoY. Sales are likely to have been undermined by rain in the first half and the resurgence of COVID-19 in the second half.
July industry review
According to the Ministry of Trade, Industry & Energy (Aug 31), retailers’ total sales rose 4.4% YoY in July, which had the same no. of weekend days/holidays as it did last year.
Offline sales dropped 2.1% YoY, while online sales rose 13.4% YoY (SSM -11.9%; Hypermarket -5.5%; Department Store -2.1%; Convenience Store +3.7%).
Average spending per customer climbed across the board (Department Store +29.0%; Hypermarket +11.0%; Convenience Store +9.2%).
No. of purchases per customer dived across the board (Department Store -24.1%; Hypermarket -14.9%; Convenience Store -5.0%).
Overall sales for categories related to outside activity continued to decline, with services/other -5.1% and apparel/accessories -6.8% contrasting with consumer electronics/culture +7.4%, foreign luxury goods +32.5% and living/household goods +14.6%.
June sales by channel
Department Store: SSSG came in at -2.1% YoY. Average spending per customer advanced 29%, but no. of purchases retreated 24%. Excluding foreign luxury products (+33%) and household goods (+12%), sales fell across all categories, with women’s casual -27%, accessories -18%, kids/sporting goods -18%, women’s formal -16% and men’s apparel -12%.
Hypermarket: SSSG stood at -5.5% YoY. Average spending per customer jumped 11%, but no. of purchases fell 15%. Sales of groceries (64% of total sales) and non-groceries dropped 3% and 9%, respectively.
Convenience Store: Sales increased 3.7% YoY (no. of stores +6%; sales per store -2%). No. of purchases declined 5%, while average spending per customer jumped 9%. Excluding instant food (-3%), sales rose across all categories, with personal care goods +14%, accessories +9%, tobacco & others +6% and processed food & beverages +2%.
Online Brokerage: Sales rose 13% YoY. Curbed travel-related consumption caused sales for services/other to plummet 16%, but other categories enjoyed growth, with groceries +46%, household living goods/furniture (incl. hygiene products) +26%, consumer electronics/other electronics +7% and books/stationery +30%.