By Cho Jin-seo
Staff Reporter
The first American-style fashion outlet that opened last year in Yeoju, southeast of Seoul, reported a mediocre performance in its first seven months.
Shinsegae Chelsea, a 50-50 joint venture between Shinsegae of South Korea and Simon Property Group of the United States, had only 430 million won ($436,000) in net profit between June and December 2007, according to the Korean firm's audit report. The profit came from 11.9 billion won ($12.1 million) in commission from tenants.
It is an unexciting financial performance for the ``premium'' fashion mall, which opened last June with big fanfare from locals and the company, Shinsegae Chelsea, which is poised to build two more malls from next year, one in Busan and the other in Paju, north of Seoul.
The mall operator said that its business is actually more profitable than the numbers suggest because net profit is leftover from royalties paid to its parent firms, Shinsegae and Chelsea, respectively. It didn't reveal the amount in royalties.
``We had set a sales target for the mall between 160 billion and 200 billion won for the first 12 months. It seems that we will be able to achieve that goal,'' said Chae Eun, marketing manager of the joint venture, Tuesday.
The mall operator receives 10 to 12 percent of sales commission from some 120 tenants, which includes popular international brands such as Gucci, Burberry, Polo Ralph Lauren, Nike and Adidas. Sales from the seven-month period to December exceeded 100 billion won, it said.
The Yeoju Premium Outlet Mall opened last June as the first American-style fashion mall in Korea, with an initial investment of some 100 billion won from Shinsegae and Chelsea. Located by Expressway 50, about an hour from southern Seoul, it usually takes longer to get there when traffic is congested on weekends.
The mall has received attention from Korean shoppers, especially those who have complained about the relatively high prices of foreign luxury brands in Korea. In its early days, the mall was notorious for long queues, crowded stores and a lack of resting places. The situation has improved in general over the next few months as the number of visitors decreased during winter.
It claims that now about 7,000 to 10,000 people visit the mall on weekdays and up to 30,000 visit on weekends.
Shinsegae has six department stores and 90 discount stores in Korea. It plans to add 28 more, as well as the two Chelsea outlets in Paju and Busan. Lotte. Shinsegae's archrival in the local retailing business is also due to open three giant fashion outlets by 2010.
Chelsea operates more than 60 Premium Outlets and other shopping centers worldwide. It was acquired by Simon Property Group in 2004.
indizio@koreatimes.co.kr