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Photo = Yonhap news |
[Alpha Biz= Paul Lee] GS Retail's stock price has plummeted to an all-time low amid concerns that its first-quarter earnings will fall short of market expectations. Investors have been disheartened by the company's business spinoff and weak financial performance, causing a continuous decline in stock value.
On Wednesday, the Korea Exchange reported that GS Retail closed at KRW 13,700 on the KOSPI market, down KRW 290 (2.07%) from the previous day. During the trading session, the stock dropped to KRW 13,650, marking a new 52-week low and the lowest price in the company's history.
The stock's decline accelerated following the company's spinoff decision. On June 3 last year, GS Retail announced a corporate split, separating its retail and hotel businesses. The plan aimed to enhance corporate value by allowing GS Retail to focus on distribution and GS P&L to specialize in the hotel sector. However, since the trading suspension due to the split, the stock has plunged 40.82%.
Poor earnings have also weighed on the stock. In Q4 2023, GS Retail's operating profit fell 48.6% year-over-year to KRW 27.7 billion, delivering an "earnings shock" below market expectations. While revenue increased, rising costs from store expansions and the downturn in the real estate market led to a decline in operating profit.
Market sentiment remains bearish. Over the past two months, all seven securities firms that published reports on GS Retail have lowered their target prices. On Wednesday, DB Financial Investment also cut its target price from KRW 21,000 to KRW 19,000, forecasting that the company’s Q1 operating profit will fall below market expectations.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
