Foreign customers shop at the main branch of Shinsegae Department Store. [Shinsegae Department Store]
Foreign customers shop at the main branch of Shinsegae Department Store. [Shinsegae Department Store]

Department store sales posted solid gains in July despite a sharp decline in the domestic stock market, driven by an increase in foreign tourist spending and strong consumption by top-tier VIP customers.

Lotte Department Store's July sales rose about 20 percent from a year earlier, according to industry sources and Yonhap.

In May and June, major events — including the Avenuel Shopping Week and a Samsung Electronics Onuri cashback promotion — fueled high growth rates. In July, the drivers shifted to expanded foreign tourist sales, a surge in stay-and-shop spending tied to the heat wave and monsoon season, and strong turnout at pop-up events.

Shinsegae Department Store and Hyundai Department Store also recorded weekly sales growth broadly in the high teens to 20 percent range throughout July.

After a bull run in June, the domestic stock market turned volatile in July, swinging between sharp drops and rebounds. Sales growth at department stores slowed modestly in some weeks following market corrections, but quickly recovered to double-digit rates.

Industry officials attributed the resilience to strong sales of luxury and high-end products, which account for roughly 40 percent of total department store revenue.

Shinsegae's VIP sales in July rose 18 percent from the same period last year, while the number of active customers grew 4 percent. On a cumulative basis from May through July, VIP sales were up 21.6 percent and active customers increased 3 percent.

By category, Lotte Department Store's July luxury goods sales climbed 35 percent, while luxury jewelry and watches surged 55 percent, reflecting broad strength across premium product lines.

Shinsegae similarly saw luxury sales rise 31.2 percent in July, with luxury jewelry up 67.9 percent.

Some analysts had suggested that strong department store sales this year were being fueled by investment gains from the stock market rally, but the recent stretch of market volatility has done little to dent performance.

Industry officials say sales are being underpinned by a sustained increase in foreign tourist numbers, continued VIP spending and a favorable exchange rate environment.

However, some observers warn that a prolonged stock market downturn could weigh on consumer sentiment. In a recent report, Lee Jin-hyeop, an analyst at Hanwha Investment Securities, noted that growth in the department store fashion category — which had maintained double-digit gains through May — slowed to single digits starting in June. "The fashion category is one where you can gauge demand from middle- and lower-income consumers," Lee said. "The market is questioning whether the cause lies in a contraction of the wealth effect following the stock market correction."


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