CJ O Shopping Co. is expected to see on-year gain in operating profit this year thanks to brisk sales of high-ticket items through TV home shopping and strong growth in sales in mobile and T-commerce businesses.

TV home shopping channel and online shopping mall operator under South Korean conglomerate CJ Group posted an operating profit of 46.6 billion won ($41.5 million) on revenue of 290.4 billion won in the second quarter ended June, beating the market expectations. Its operating profit was up 43.6 percent from the same period a year ago.

The company reported an earnings surprise thanks to strong sales in its mobile app and T-commerce units on top of solid sales in its TV home shopping channel. CJ O Shopping currently runs four sales channels including TV, online mall, mobile app and global market. Sales through catalogues, the direct-mail advertisement, dropped only in the second quarter.

Its TV home shopping channel, its biggest revenue generator, remained resilient. In particular, its choice of high-ticket items such as seasonal home appliances, rental cars and travel packages was well received by consumers, helping the company to rake in higher profits.

Sales in its T-commerce business also surged more than 200 percent in the April to June period from a year ago. T-commerce that pursues two-way communications between the provider and customers allows TV viewers to directly order products shown on various programs on TV with remote control. For example, while watching a sport program on TV, a TV viewer can search and order the player’s cloths and accessories.

The country’s TV home shopping leader also owns a number of popular private brands (PB). It has expanded its PB brands to 20 since it first launched its own underwear brand Fidelia in 2001. Cumulative sales of its cosmetics brand SEP recently exceeded 100 billion won. Two more brands are expected to hit the market this year. The company also plans to sell its PB products in duty-free shops and open markets and aims to boost the total prices of PB products the company will sell to more than 1 trillion won by 2020.

CJ O Shopping is also expected to avoid tougher government regulations on the retail business that mainly focuses on brick-and-mortar businesses and big-box retail stores. The new administration under liberal President Moon Jae-in recently announced its plan to hike minimum wage and strengthen measures to protect small and medium businesses and self-employers, dealing a big blow at the local retail business.

On expectations for further improvement in its earnings, market analysts forecast CJ O Shopping to report 161.5 billion won in operating profit for this year on revenue of 1.185 trillion won. The operating profit would be up 11.4 percent from the previous year.

Buoyed by the better-than-expected earnings and rosy outlook on its business prospect, foreign and institutional investors have massively picked up shares of CJ O Shopping. As of 2:51 p.m. Wednesday, shares of CJ O Shopping were 1.71 percent down at 212,600 won.

By Chung Woo-sung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]