Seoul: Shinsegae Inc., the operator of South Korea's second-largest department store chain by sales, reported a net loss in the fourth quarter, attributed to one-off costs. In the three months ending December 31, Shinsegae posted a net loss of 48.1 billion won (US$33.2 million), a sharp reversal from a net profit of 42.9 billion won during the same period the previous year, as stated in a regulatory filing.

According to Yonhap News Agency, a company spokesperson explained over the phone that increased provisions for ordinary wages and voluntary retirement packages at its duty-free shops significantly impacted the financial performance. Approximately 50 billion won of such provisions were reflected in the net result.

The financial strain was partly due to a Supreme Court ruling in December, which mandated that regular periodic bonuses be included in ordinary wages, as decided in a case involving Hyundai Heavy Industries Co. This ruling is anticipated to compel local businesses to allocate more funds for wages and severance pay for their employees.

Shinsegae's operating profit dropped by 48.5 percent to 106.1 billion won in the December quarter, compared to 205.9 billion won a year earlier. High inflation and reduced consumer spending also contributed to the decline in quarterly earnings, as noted by the spokesperson. Despite these challenges, sales experienced a 5.9 percent increase, reaching 1.82 trillion won from 1.72 trillion won in the same period.

For the entirety of 2024, the company's net income plummeted by 43.5 percent to 176.2 billion won from 311.9 billion won the previous year. Operating profit fell by 25 percent to 479.47 billion won, while sales saw a 3.4 percent rise to 6.57 trillion won during the same timeframe.