BGF Retail posts W100.8b operating profit in Q3, buoyed by RESCENE bread craze

BGF Retail, the operator of convenience store chain CU, extended its sales and operating profit growth into the third quarter, driven by differentiated products including RESCENE bread.

The company disclosed Thursday that consolidated sales for the third quarter reached 2.52 trillion won ($1.88 billion), up 2.1 percent from a year earlier. Operating profit rose 3.2 percent to 100.8 billion won over the same period. For the first nine months of the year, cumulative sales came to 7.06 trillion won and operating profit totaled 223.8 billion won, up 4.3 percent and 18.0 percent, respectively, from a year ago.

BGF Retail attributed the solid results — achieved despite a high base from government consumption vouchers the previous year and unfavorable summer weather including heat waves — to growth in foreign customer spending and strong sales of processed foods, particularly snacks. Marketing campaigns built around mega-hit intellectual properties such as RESCENE, along with standout products including coffee candy and truffle Jamón serrano snacks, drove the top-line gains.

The improved product mix also lifted the average product margin. Tobacco's share of sales fell 0.4 percentage points from a year earlier, while processed foods expanded their share by 0.7 percentage points, reflecting a broader shift toward general merchandise.

Sales to foreign customers continued to accelerate. Growth in foreign customer sales — measured by overseas payment methods and prepaid cards issued to foreign visitors — quickened from 53.3 percent in the first quarter to 60.9 percent in the second and 66.8 percent in the third. Foreign customers also accounted for 35.5 percent of the total increase in store sales during the third quarter, and their share of overall sales widened by 1.0 percentage point over the year, from 1.5 percent to 2.5 percent.

BGF Retail has been enhancing the shopping experience for foreign visitors through services such as on-the-spot tax refunds, unmanned currency-exchange kiosks and tourist-oriented specialty stores, as well as tailoring product lineups to sales data from individual tourist destinations.

Going forward, the company plans to broaden its lineup of IP-based differentiated products to build a next-generation pipeline of leading items. It also aims to strengthen its long-term earnings base by focusing store openings on high-profitability locations and increasing the proportion of mid-to-large stores ranging from 82 to 132 square meters.