GS Retail’s 2019 outlook unclear

GS Retail’s 2019 outlook unclear

GS Retail’s third-quarter earnings have been solid but it’s uncertain whether earnings will improve next year, said KB Investment and Securities on Nov. 6 downgrading the recommendation to a “hold” from a “buy” while maintaining a 42,000 won (US$37.41) target price.

Its revenue in 2019 will rise 5 percent from this year to 9.01 trillion won and operating profit by 14 percent to 213.3 billion won. Operating profit from convenience store business, however, will only gain 5 percent. It is uncertain whether revenue increase from existing stores could offset growing costs following 11 percent hike in minimum wage next year. It will not be easy to cut costs further, and the fact that customer transaction rose 6 percent this year may be a burden, said analyst Park Sin-ae.

As for its third-quarter earnings that beat market expectations with 2.33 trillion won revenue and 77.6 billion won operating profit, up 3 percent and 40 percent on-year respectively, cost-cutting efforts helped, said the analyst.

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