The sales growth of semi-durable goods in Korea hit the lowest level in nearly four years as consumers tighten their belts amid an economic slowdown, data showed Wednesday.
Sales of semi-durable goods shrank 4.2 percent in August from a year earlier, marking the lowest level since December 2008, according to the data by Statistics Korea. Shipments of such products have been contracting throughout this year.
Semi-durable goods refers to a product that can be used repeatedly by a consumer over a period of time, such as clothing or shoes, but has a shorter expected time of use than durable goods like furniture or automobiles.
Analysts said the dismal data came as consumers have opted to stay thrifty on goods that are not daily necessities like food, so they can shop big on more durable products like home appliances.
"Apparel sales fell 3.7 percent on-year in August for the first time since December 2008. There's a big inventory burden for the whole industry," said Park Jong-dae, an analyst at Hana Daetoo Securities Co.
With the economy losing steam, sluggish retail sales have hit companies hard. According to local corporate data tracker FnGuide, major retailer LG Fashion Corp. is expected to see its third-quarter operating profit drop 2.4 percent, following the profit falls for the previous two quarters.
However, most analysts gave a rosier picture for their fourth-quarter earnings as the winter period is traditionally considered a peak season for department stores and retail chains.
"The moderate appreciation of the local currency gives a boost to domestic-oriented companies, including fashion, which is why we forecast a turnaround for apparel firms," said Nah Eun-chae, an analyst at Korea Investment & Securities Co. (Yonhap)