S.Korea to issue four more downtown Seoul duty-free licences (updated)

SK Networks Co

29/04/2016 09:33

* S.Korea Q1 duty free sales up 21 pct on year 
    * Sales recover after last year's MERS outbreak 
    * Chinese tourist inflow drives growth 
 
 (Adds market growth, comments, Lotte background) 
    By Joyce Lee 
    SEOUL, April 29 (Reuters) - South Korea, the world's largest 
duty-free market, will grant four more duty-free store licences 
in downtown Seoul, the customs agency said on Friday, banking on 
strong Chinese tourist demand to overcome concern of oversupply 
among some operators. 
    The popularity of South Korean products such as cosmetics 
among Chinese travellers has helped the country's duty free 
market regain momentum following a dip last year after a deadly 
outbreak of Middle East Respiratory Syndrome (MERS). 
    South Korea's duty free market generated a record 2.7 
trillion won ($2.37 billion) in sales in January-March, up 21 
percent from a year earlier, the agency said. 
    Meanwhile, Chinese tourist arrivals to the country rose 17 
percent in the period, according to HSBC research, recovering 
from a decline in June-August during the MERS outbreak. 
    Last year the government awarded three Seoul city duty free 
licences, but the stores have gotten off to a slow start and 
have struggled to attract anchor luxury brands.  urn:newsml:reuters.com:*:nL3N139067 
    "The operational conditions for duty free stores are daily 
becoming more difficult, as additional stores compete to secure 
brands and visitors," Hanwha Galleria Timeworld Co Ltd 
 027390.KS , one of the new operators, said in a statement. 
    "It is regrettable that the situation of the five new 
operators doesn't appear to have been taken into consideration," 
it said of the latest plan, referring to the winners of the 
three licences as well as two stores taking over expiring 
licences from existing operators. 
    Of the four licenses to be issued in Seoul this year, large 
companies such as Lotte Duty Free, the world's third-biggest 
duty free operator, will be able to compete for three of them, 
while one will be reserved for a smaller operator, Korea Customs 
Service said at a briefing. 
    The government said it will begin a six-month process to 
pick new operators starting late May or early June. 
    Lotte's second-largest duty free shop made about 611 billion 
won in 2015 sales but its licence expires at the end of June. 
Whether it can continue operating will have a bearing on parent 
Hotel Lotte Co Ltd's  HTLOT.UL  planned summer stock listing, 
analysts said. 
    Last November, the government did not renew licences held by 
Lotte and SK Networks Co Ltd  001740.KS  that expire in June and 
May respectively, instead giving them to relative newcomers 
Shinsegae Co Ltd  004170.KS  and Doosan Co Ltd  000150.KS .  
    The decision to add four more will take the number of 
downtown Seoul duty free stores to 13 by the end of 2016 from 
six a year earlier. 
    ($1 = 1,139.5800 won) 
 
 (Reporting by Joyce Lee; Editing by Tony Munroe and Christopher 
Cushing) 
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters 
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net)) 
 
Keywords: SOUTHKOREA DUTYFREE/