CU and GS25, the two leading players in Korea's convenience store industry, both posted strong second-quarter results. Earnings improved as a heat wave boosted demand for summer products such as beverages and ice cream, while sales to foreign customers surged.
According to the retail industry on the 8th, BGF Retail (282330), which operates the CU convenience store chain, reported second-quarter revenue of 2.4268 trillion won and operating profit of 84.9 billion won on a consolidated basis. The figures rose 6% and 22.3% from a year earlier, respectively, exceeding market expectations.
GS Retail (007070), which operates GS25, also delivered results that beat market expectations. Second-quarter revenue on a consolidated basis was 3.1751 trillion won, up 6.7% from a year earlier. Operating profit rose 27.5% over the same period to 109.4 billion won. The convenience store business drove the results. GS25's second-quarter convenience store revenue was 2.3844 trillion won, up 7.1% from a year earlier, while operating profit rose 21% to 71.4 billion won.
The persistent heat wave was a major factor behind both companies' strong performance. As daytime temperatures approached 40°C in many parts of the country, demand for summer product categories such as beverages and ice cream rose sharply. CU's second-quarter ice cream sales rose 30.6% from a year earlier, while dessert and food ingredient sales increased 32.2% and 30.4%, respectively.
The rise in foreign customers was another common tailwind for both companies. CU's second-quarter foreign customer sales rose 60.1% from a year earlier. In particular, foreign customer sales in the Busan area increased 97.6% over the same period. The gains are attributed to the expansion of services targeting foreign demand, such as dedicated zones for overseas mobile payments. GS25's foreign customer sales also rose 67.2% from a year earlier.
The industry expects the improvement in the convenience store business to continue for the time being. With a record-breaking heat wave likely to persist, along with an influx of foreign customers and the expansion of tailored products and services, a favorable business environment for convenience stores is projected to continue. According to the "Major Retailer Sales Trends" released by the Ministry of Trade, Industry and Energy, the year-on-year sales growth rate for convenience stores averaged about 2.7% from January to April this year, but rose to the 5% range in May and June, at 5.9% and 5.1%, respectively.
"Tailored strategies based on customer segmentation, such as the introduction of tourism-specialized stores for visiting foreigners and stores offering overseas food ingredients for foreign residents in Korea, have proven effective and diversified our customer inflow," a convenience store industry official said.
