(LEAD) GS Retail Q3 net profit sharply drops on base effect

(ATTN: ADDS details in para 4, spokesperson's comments in para 5; CHANGES headline)

SEOUL, Nov. 8 (Yonhap) -- GS Retail Co., the operator of GS25 convenience stores, said Tuesday its third-quarter net income saw a sharp drop from a year earlier due to a base effect caused by a merger deal last year.

Net income came to 40.2 billion won (US$29 million) on a consolidated basis for the three months ending in September, compared with 754.8 billion won during the same period of last year, the company said in a regulatory filing.

Operating profit declined 16 percent on-year to 87.6 billion won. Sales rose 9.1 percent to 2.95 trillion won.

GS Retail said the sharp decline in net income is blamed on a base effect occurred from its merger of GS Shop, an infomercial channel, in July 2021. The transaction generated a significant 633.2 billion won of one-off gain in "bargain purchase" profits for the company, it said.

"The apparent decline in net income does not represent the health of GS Retail's business, as the previous year's net includes a significant one-off gain. When adjusted for the previous year's bargain purchase profits, GS Retail's net income declined on-year 10.9 percent," a company spokesperson explained.

Operating profit at its convenience stores inched up 0.7 percent, while sales rose by 8.2 percent to 2.1 trillion won.

Its supermarket business saw an operating profit drop of 4.6 percent despite an 8.1 percent increase in sales affected by a cost increase for its same-day delivery service.

Its hotel business saw an operating profit jump of 22.8 percent, thanks to more bookings, corporate events and weddings from eased pandemic restrictions.

GS Retail operates over 15,400 GS25 convenience stores across South Korea, more than 360 GS THE FRESH supermarkets, seven hotels and an infomercial channel.

fairydust@yna.co.kr
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