Shinsegae's E-Mart has published its annual results, posting a 8.6% increase in net sales to KRW15.87 tn (US$14.7 bn) in FY2017, but operating profit fell -0.3% to KRW566.9 bn (US$532.8 m).
Sales strong at larger formats, but still under pressure
E-Mart and E-Mart Everyday, the retailer's hypermarket and supermarket banners also performed well in FY2017. Gross sales at E-Mart and E-Mart Everyday increased by 3.1% to KRW11.68 tn and 7.9% to KRW1.13 tn respectively. Results appear strong at first glance, but SSSg fell in both formats. Furthermore, the pace of new store openings has slowed down in comparison to previous years, indicating concerns over profitability. E-Mart recorded two fewer stores (145) last year and E-Mart Everyday only added two stores to its network (231).
Convenience and online are the fastest growing channels in the country. E-Mart's online sales, for example, grew 25.2% to KRW1.05 tn last year, although it still accounts for a small proportion of the retailer's total sales. To combat the challenges of local competition and changing retail landscape, E-Mart outlined its online investment plans last month.
E-Mart 24 sales surge 80.8%.
In July last year, E-Mart decided to rebrand its With Me convenience banner to E-Mart 24. The retailer invested KRW2.1 bn on 1,552 stores in FY2017 and will continue to rebrand more stores this year. E-Mart has also been aggressively expanding its convenience network, posting a 80.8% increase in sales to KRW6,841 m YoY. Last year, it opened 887 stores taking its total network to 2,652 stores nationwide, overtaking Ministop as the fourth largest convenience chain in South Korea, and behind CU, GS25 and 7-Eleven.
What is happening overseas?
E-Mart ended the fiscal year with one store in Vietnam, two stores in Mongolia and one store in China. Sales continued to grow strongly in Vietnam, up 24.3% to KRW52 bn YoY, while the last E-Mart store in China has now closed. The retailer is looking to enter the U.S, and is also considering other markets such as Cambodia and Laos.
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