Incheon Shinsegae conducted a 30 billion won shareholder-allocated capital increase last month to fund the development of a mixed-use complex in Songdo. Shinsegae, holding a 95.06% stake in Incheon Shinsegae, provided the capital support as part of ongoing funding for the project originally planned for 2019 completion. The company's strengthened financial position, driven by robust department store performance, has expanded its capacity to support the subsidiary's development plans.
Shinsegae Provides Continuous Capital Support Through Multiple Increases
Shinsegae has conducted multiple shareholder-allocated capital increases for Incheon Shinsegae since the subsidiary's establishment in January 2015. The capital injections include 82 billion won in April 2016, 30 billion won in November 2022, 20 billion won in April 2024, 20 billion won in February last year, and 15 billion won in October last year, according to industry sources on the 4th.
Incheon Shinsegae was established to construct and operate sales facilities including a department store in the Songdo Free Economic Zone. In September 2015, Shinsegae Group, Incheon City, and the Incheon Free Economic Zone Authority signed an investment agreement for the construction of a Songdo Shinsegae urban-type complex shopping mall.
Shinsegae Reports Strong Q1 Financial Performance
Shinsegae's Q1 revenue reached 1.8471 trillion won, a 10.9% increase compared to the same period last year. Operating profit grew 49.5% to 197.8 billion won, while net profit surged 88.5% to 145.4 billion won.
The department store sales growth momentum continued in April and May. While Q1 total department store sales growth averaged 13.5%, April and May recorded 13.9% and 16.5% respectively. The performance was attributed to increased foreign visitors and rising domestic consumption.
Total sales figures represent customer sales amounts from direct purchases and special contract purchases. Accounting revenue reflects only the net amount after excluding portions attributable to suppliers in special contract transactions, making it smaller than total sales.
Songdo Complex Project Faces Delayed Timeline Since 2015 Agreement
The original plan called for completion by 2019, but the timeline was postponed. Shinsegae Group explained that construction was delayed during the design process to create a complex suitable for the Songdo commercial district. The complex will include a department store and complementary facilities.
Direct purchase transactions refer to arrangements where large-scale retailers bear responsibility for unsold inventory purchased from suppliers. Special contract purchase transactions allow retailers to return unsold goods while taking a fixed percentage or amount of sales revenue after product sales.
FAQ
What capital increase did Incheon Shinsegae conduct last month?
Incheon Shinsegae conducted a 30 billion won shareholder-allocated capital increase last month to fund the Songdo complex development.
What is Shinsegae's ownership stake in Incheon Shinsegae?
Shinsegae holds a 95.06% stake in Incheon Shinsegae, making it the primary shareholder.
How did Shinsegae perform financially in Q1?
Shinsegae reported Q1 revenue of 1.8471 trillion won with a 10.9% year-over-year increase, operating profit of 197.8 billion won up 49.5%, and net profit of 145.4 billion won up 88.5%.
