E-Mart Shares Drop Over 7% Intraday After Earnings Disclosure… Impact of Starbucks’ Weak Performance

E-Mart shares turned sharply lower during trading on the afternoon of the 11th. Analysts attribute the surge in sell orders to the confirmed weak third-quarter performance of SCK Company, its subsidiary that operates Starbucks.

At 2:07 p.m., E-Mart traded at 65,300 won on the Korea Exchange, down 5,500 won (7.77%) from the previous close. At one point during trading, the stock price fell as low as 63,700 won.

After opening higher, E-Mart shares fluctuated around flat levels throughout the morning before plunging simultaneously with the disclosure of its third-quarter preliminary earnings at 1:10 p.m. On a consolidated basis, E-Mart reported third-quarter revenue of 7.7919 trillion won and an operating profit of 46.1 billion won. Revenue increased by 1.2% year-on-year, but operating profit decreased by 69.6%. The consensus estimate for operating profit compiled by FnGuide was 159.5 billion won.

On a standalone basis, the company posted revenue of 5.104 trillion won and an operating profit of 166 billion won, representing year-on-year increases of 11.1% and 3.3%, respectively.

However, the combined operating losses of its major consolidated subsidiaries reached 80.6 billion won. SCK Company recorded an operating loss of 45.3 billion won in the third quarter, turning to a deficit. Compared with the 60 billion won operating profit it generated in the same period last year, this represented the largest decline in operating profit among its subsidiaries.