Hyundai Department Store, Lotte Shopping, and Shinsegae are experiencing a turning point in depreciation cost burdens this year, according to analysis released May 28 by Hana Securities. Companies that completed large-scale store openings and renovations are reducing depreciation expenses, while those with remaining expansion capacity face increasing burdens. Hyundai Department Store's depreciation costs are projected to decrease 6% to 385 billion won this year, marking the first decline since 2012, while Shinsegae records the largest increase among six major retailers. The shift reflects the capital-intensive nature of the department store sector, where multi-hundred-billion-won investments in individual stores generate fixed depreciation costs that impact profitability for years after opening.
Hyundai Department Store Records First Depreciation Decrease Since 2012
Hyundai Department Store's depreciation costs are estimated to reach 385 billion won this year, representing a 6% decrease from the previous year. The reduction stems from the completion of depreciation cycles for four stores that opened in early 2022: The Hyundai Seoul, Space One, Jungdong branch, and Daejeon Outlet. These four locations alone generate an annual reduction effect of 27 billion won. The company also shifted from regular renovations to focusing only on core stores starting last year. Analysis indicates no factors will increase depreciation costs through 2027.
![Department store crowded during summer regular sale [Source: Yonhap News file photo]]()
Shinsegae Faces Largest Depreciation Increase Among Major Retailers
Shinsegae is experiencing the largest depreciation cost increase among six major retailers (Lotte Shopping, E-Mart, Hyundai Department Store, Shinsegae, GS Retail, BGF Retail). The increase resulted primarily from renovations to the food halls at the main store and Gangnam branch last year. Shinsegae operates the fewest stores among the three major department store chains, leaving room for new store openings. Despite the highest depreciation burden, Shinsegae's consolidated operating profit is estimated to increase 63% this year, driven by the highest external growth rate among the three chains and improved duty-free business profitability.
Six Major Retailers See Combined Depreciation Peak in 2024
Combined depreciation costs for six major retailers spanning department stores, large supermarkets, and convenience stores peaked in 2024 and have entered a trend of decline, according to Hana Securities. The shift marks the completion phase of the billing cycle for store opening and renovation competition that continued since 2010. Park Jong-dae, Hana Securities researcher, stated this represents "the first inflection point in the history of the retail industry since 2010" and noted the sector is "in a phase where operating leverage from sales growth can significantly occur." Lotte Shopping, which already established a substantial store network, is also experiencing significantly reduced depreciation burden.
Hyundai and Shinsegae Announce Store Opening Schedules Through 2030
Hyundai Department Store has scheduled three store openings: The Hyundai Busan in 2027, Gyeongsan Premium Outlet in 2028, and The Hyundai Gwangju in 2029. Shinsegae has scheduled the Gwangju branch annex for late 2028, with Songdo branch and Suseo Station complex transfer center planned for after 2030.
FAQ
What caused Hyundai Department Store's depreciation costs to decrease this year?
Hyundai Department Store's depreciation costs decreased 6% to 385 billion won this year due to the completion of depreciation cycles for four stores that opened in early 2022: The Hyundai Seoul, Space One, Jungdong branch, and Daejeon Outlet, generating a 27 billion won annual reduction.
Why is Shinsegae experiencing higher depreciation costs than other department stores?
Shinsegae's depreciation costs increased primarily due to renovations to the food halls at the main store and Gangnam branch last year, and because the company operates the fewest stores among the three major chains, leaving room for new openings.
When did combined depreciation costs for major retailers reach their peak?
Combined depreciation costs for six major retailers (Lotte Shopping, E-Mart, Hyundai Department Store, Shinsegae, GS Retail, BGF Retail) peaked in 2024 and entered a trend of decline, according to Hana Securities analysis released May 28.
