What: Lotte, Shinsegae, and Hyundai department stores have reported profits declining in the first quarter of the year.

Why it is important: The country’s top department stores are suffering from a slowdown in the economy and weak consumption.

The operator of the second largest department store in Korea, Shinsegae Inc., saw its operating profit decline 6.8% to KRW 152.4 billion in the first quarter. Sales at its department store unit grew 6.1% to KRW 620.9 billion however sales volume was unlikely to have risen as the prices continue to increase amid inflation.

Hyundai Department Store Co. also reported a decline in its operating profit, dropping 12.4% to KRW 77.9 billion. Its sales rose 17.5% to KRW 1.09 trillion and its earnings still exceeded analysts’ estimates which stood at KRW 42.7 billion.

On its side, Lotte Shopping Co.’s net profit fell 16.4% to KRW 57.8 million however its operating profit increased 63.7% to KRW 112.5 billion. Additionally, its department store unit saw sales increase by 7% to KRW 796 billion and operating profit increased 21.1% to KRW 131 billion in the first quarter.

All three department stores were estimated to have seen only single-digit growth in sales of luxury goods as wealthy consumers began to spend abroad and pulled back on their spending due to inflation and rising interest rates. In comparison, an increase of more than 30% in sales was reported for the first quarter of 2022.

Slowing economy slams South Korean retailers

Hyundai Department store Q1 results

Lotte Shopping Q1 results

Shinsegae Inc. Q1 results