SEOUL, KOREA - Furniture stocks are in decline due to the upcoming opening of Korea's first IKEA store scheduled next month. The top-three furniture stocks including Hanssem, Hyundai Livart, and Enex have fallen for several days in a row.
Hanssem, the nation's No. 1 furniture purveyor, saw its share price drop 4.37 percent closing at 109,500 won on November 17. For this month alone, its share price fell 18.9 percent. Last month's peak price of 145,000 won achieved by the news of its third-quarter operating profit rising 80 percent from a year was almost lost.
As for Hyundai Livart, which reported its first-half operating profit already surpassing that of the annual operating profit last year, it lost 34.96 percent for this month to date. Enex also lost 13.1 percent for the month.
The direct cause of the decline was the launch of the IKEA Korean website that announced prices of more than 8,000 items. But the Swedish company's ambitious plan somehow backfired as some of the items were much more expensive in Korea than elsewhere. Lee Kyung-ja, analyst with Korea Investment & Securities, said, "There are controversies going on after IKEA published its prices as some items are more expensive than in Japan and China. Without the low-cost advantage, the competitive landscape would be much different from originally expected."
Another factor of inconvenience that customers have to carry the furniture items themselves and assemble on their own may be a variable that can change the competitive dynamics. She added, "The uncertainties surrounding the furniture stocks introduced by IKEA will disappear as soon as IKEA opens its store."
Article provided by The Korea Economic Daily
