E-Mart faces lowered earnings expectations from Korean brokerages ahead of its Q2 provisional results announcement scheduled for next month 12th. Since June, three out of six domestic securities firms that issued investment opinions on E-Mart's Q2 performance have downgraded their target stock prices, with Samsung Securities reducing its target from 152,000 won to 120,000 won, Korea Investment Securities from 135,000 won to 115,000 won, and Hanwha Investment Securities from 130,000 won to 100,000 won. The downgrades stem from performance deterioration at SCK Company, E-Mart's subsidiary operating Starbucks Korea, following the Tank Day marketing incident that occurred in May. Analysts attribute the subsidiary's weakened profitability to the marketing controversy, which has dragged down E-Mart's consolidated earnings outlook despite the parent company's standalone performance improvements. The Korean retail sector is experiencing competitive realignment, with Homeplus store closures and previous incidents at competitors reshaping market dynamics.
Korean Brokerages Lower E-Mart Q2 Earnings Estimates
Heungkuk Securities downgraded E-Mart's Q2 consolidated operating profit estimate to 72.1 billion won from a previous 79 billion won, according to financial data provider WiseReport. Kiwoom Securities has progressively reduced its Q2 operating profit forecast for E-Mart, first lowering the estimate from 65.4 billion won to 31.9 billion won in early June, then further down to 16.6 billion won in a recent revision. Park Sang-joon, researcher at Kiwoom Securities, stated that E-Mart's Q2 consolidated operating profit is projected at 16.6 billion won (-23%), falling short of market expectations, as SCK Company's revenue declined and operating profit turned to a loss due to the Tank Day event controversy. Park added that considering prepaid card balance refunds processed in June during the first half, there remains a possibility of further Q2 performance weakening. Kim Myung-joo, researcher at Korea Investment Securities, diagnosed that E-Mart's Q2 operating profit is expected to fall 77.2% below market expectations, with SCK Company and online business underperformance as the main factors. Securities firms presented SCK Company's separate operating profit estimate range from an operating loss of 23 billion won to an operating profit of 20.3 billion won, showing marked profitability deterioration compared to pre-Tank Day marketing incident levels (operating profit 20 billion to 44 billion won). Starbucks' actual performance decline is indirectly reflected in payment indicators: according to IGAWorks data analysis solution Mobile Index, Starbucks' estimated credit and debit card payment amount last month was approximately 100.3 billion won, a 17.1% decrease from the estimated payment amount in May (121.1 billion won) when the Tank Day marketing incident was triggered, marking the lowest level among monthly estimated payment amounts over the recent eight months since last November.
E-Mart's Samsung Life Stake Value Rises Over 2 Trillion Won
The value of E-Mart's stake in Samsung Life has increased by over 2 trillion won this year alone, according to the Financial Supervisory Service's electronic disclosure system on the 23rd. As of last year-end, E-Mart held a 5.88% stake (11,762,667 shares) in Samsung Life, and the stake value surged as Samsung Life's stock price jumped 110.5% this year (from 156,500 won on January 2 to 329,500 won on July 23). Park Sang-joon, researcher at Kiwoom Securities, stated that E-Mart currently holds a 5.88% stake in Samsung Life, and as Samsung Life's stock price soared, the stake value also increased by more than 2 trillion won.
Homeplus Store Closures Drive E-Mart Sales Growth
Homeplus closed 59 stores by last month, and nearby E-Mart stores saw sales increase by 10%, raising the overall same-store growth rate by 2 percentage points, according to Park Jong-dae, researcher at Hana Securities. Park stated that reflecting this, the Q2 same-store growth rate is expected to reach around 3% year-over-year. Baek Jae-seung, researcher at Samsung Securities, noted that within the hypermarket sector, Homeplus has been steadily closing underperforming stores since Q4 last year, and the easing of competition within the industry is serving as a major basis for E-Mart's earnings recovery. Baek added that reflecting these factors, E-Mart's core business performance improvement is expected to continue in the second half.
FAQ
Q: When will E-Mart announce its Q2 2025 earnings results?
A: E-Mart is scheduled to release its Q2 provisional results on next month 12th.
Q: Why have Korean brokerages downgraded E-Mart's Q2 earnings estimates?
A: Three out of six Korean securities firms lowered their target stock prices and earnings forecasts due to performance deterioration at SCK Company, E-Mart's subsidiary operating Starbucks Korea, following the Tank Day marketing incident that occurred in May. Kiwoom Securities reduced its Q2 operating profit estimate to 16.6 billion won, citing revenue declines and operating losses at the Starbucks subsidiary.
Q: How has E-Mart's Samsung Life stake value changed this year?
A: E-Mart's 5.88% stake in Samsung Life increased in value by over 2 trillion won this year, as Samsung Life's stock price surged 110.5% from 156,500 won on January 2 to 329,500 won on July 23.
