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Retailers see sales drop on weak consumer sentiment

South Korean retailers saw their sales fall in the first two months of this year, weighed by sluggish consumption, industry data showed Friday.

The sales of Lotte Department Store, the country's leading retail chain, dropped 1.2 percent in the January-February period from a year earlier, according to company data.

Its rival Hyundai Department Store also saw its combined revenue slip 0.7 percent on-year in the cited period, the company said.

Shinsegae posted double-digit sales growth over the two months, but it was largely due to the expansion of its Gangnam branch in southern Seoul, according to the company.

(Yonhap)
(Yonhap)

The sluggish sales came as South Korean consumers have been spending less, dampened by a slowing economy. Mounting household debt and scarcely rising incomes have been blamed as reasons that weigh on consumption.

The average propensity to consume, which reflects household spending, recorded a five-year low of 71.1 percent at the end of 2016, 

The department stores said sales shrank relatively more in February compared to the previous month because January revenue spiked on seasonal demand due to the Lunar New Year holiday which fell in late January this year.

"The first two months have been tough as there were less working days compared to the same time last year, but we're hoping to make a turnaround in March," a department store official said.

Large discount store chains run by Lotte and Shinsegae also recorded a decline in Jan-Feb sales. Lotte Mart posted a combined 5.4-percent on-year slide during that period, with industry leader E-Mart expected to log a double-digit drop in sales. (Yonhap)

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