Department store stocks are broadly weakening just as concerns over a semiconductor peak-out have eased. Shares of Hyundai Department Store (069960), Lotte Shopping (023530), and Shinsegae (004170) remained near their highs through last month, buoyed by rising numbers of foreign tourists and growing domestic consumption, but have since entered a downtrend. Analysts suggest the stocks have entered a correction phase, given the absence of any notable catalysts and their previously pronounced gains.
According to the Korea Exchange, Hyundai Department Store closed the regular session on the 23rd at 139,600 won, up 500 won (0.36%) from the previous trading day. Compared with the gains seen across sectors such as semiconductors, secondary batteries, automobiles, and defense, it ended flat. Lotte Shopping fell 4.61%, compounded by the impact of a stake sale by Lotte Group Chairman Dong-bin Shin, while Shinsegae dropped 3,000 won (0.55%) from the previous session.
All three companies share the common feature of having recently traded at peak prices. As of the 17th of last month, Hyundai Department Store's closing price broke through the 200,000 won mark for the first time, but did not hold the level for long. Shinsegae's closing price stood at 792,000 won on the 3rd of this month, but has since steadily declined, widening its drop to 31.31%. Lotte Shopping also broke through the 200,000 won line for the first time last month, but subsequently fell about 39.24%.
Analysts in the securities industry attribute the moves to a correction phase brought on by the steep recent gains in department store stocks. Kim Myung-joo, an analyst at Korea Investment & Securities, said, "The shares of the three department store companies, which showed explosive momentum in the first half, are undergoing a correction as they enter the second half. With no additional catalysts within the department store industry throughout July, there is a high likelihood that stock price volatility will continue for some time, regardless of valuation levels."
Nonetheless, some noted that medium- to long-term drivers remain intact thanks to solid fundamentals. NH Investment & Securities, DB Securities, Shinhan Investment & Securities, Kyobo Securities, and LS Securities, which issued reports on Hyundai Department Store, Lotte Shopping, and Shinsegae this month, were found to have raised their target prices from previous levels.
