Hyundai Duty Free results and prospects improve amid product rationalisation and imminent Dongdaemun closure

SOUTH KOREA. Hyundai Duty Free posted a +22.1% year-on-year sales increase to KRW294 billion (US$210.2 million) for its first quarter ended 31 March.

The Hyundai Department Store subsidiary said the result was driven by a strong performance in luxury categories (watches and jewellery) at Incheon International Airport.

The company’s operating loss narrowed “significantly” to KRW1.9 billion (US$1,358,282)

The group noted a “solid” performance at the airport and said it expected an overall business turnaround in H2 due to key changes to its downtown Seoul operations.

As reported, Hyundai Duty Free is closing its Dongdaemun, Seoul store, effective 31 July, the latest victim of deeply challenging market conditions.

The company will instead focus its downtown duty-free business on the Trade Center branch in Gangnam, Seoul. That store will be reduced from three floors (8 to 10) to two (8 and 9).

Hyundai Duty Free said it aims for profitability improvements through the downsizing of “low-efficiency” merchandise at the Trade Center store and the closure-related relocation of “high-efficiency” products from Dongdaemun.

Underlining the fact that daigou business remains important to Korean travel retail despite well-documented structural changes, the company said it now enjoys enhanced bargaining power with resellers due to the recent decline in downtown duty-free stores.

“With the recent strong growth trend in the luxury category, growth of the Trade Center branch centred on luxury is anticipated,” Hyundai Duty Free said.