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Source: BGF Retail |
[Alpha Biz= Paul Lee] BGF Retail announced on May 8 that its consolidated operating profit for the first quarter (January to March) of 2024 amounted to KRW 22.6 billion, a 30.7% decrease compared to the same period last year. This result significantly missed analysts' expectations, which had projected an operating profit of KRW 31.4 billion.
The company's revenue for the first quarter reached KRW 2.0165 trillion, representing a 3.2% year-on-year increase. However, its net income for the period dropped by 42.7%, amounting to KRW 13.4 billion. It is noted that 98% of BGF Retail’s total revenue comes from its convenience store business.
The slowdown in convenience store sales growth has been attributed to several factors, including a weakened domestic economy due to political instability from the 12/3 illegal military coup and impeachment fallout, as well as ongoing events such as the Muan Airport aircraft disaster and wildfires in Gyeongbuk. At the same time, fixed costs, particularly labor costs, increased in the context of high inflation, severely impacting profitability.
Despite the downturn in Q1, BGF Retail remains optimistic about a recovery in the second quarter (April to June), which is typically a high season. The company expects increased sales from products such as ready-to-eat meals, desserts, beverages, and alcoholic drinks, driven by higher demand for outdoor activities.
Some analysts suggest that the convenience store industry may be approaching a limit in terms of quantitative growth. According to the Ministry of Trade, Industry, and Energy, convenience store sales in Q1 saw a 0.4% decline year-on-year, marking the first quarter of negative growth since the related statistics were first compiled in 2013. The number of stores operated by the four major convenience chains (CU, GS25, 7-Eleven, and Emart24) decreased by 28, totaling 54,852 stores in Q1 2024, marking the first time in history that the number of stores has declined on an annual basis.
알파경제 Paul Lee 특파원(hoondork1977@alphabiz.co.kr)
