The author is an analyst of NH Investment & Securities. She can be reached at jiyoony@nhqv.com. -- Ed.

Domestic apparel retail sales upped 13% y-y in July. Apparel growth at department store channels clocked at an average of +39% y-y, spurred by summer vacation season and regular sales season. Domestic fashion sales trending upwards thus far in 3Q22 Sales results for Jul 2022 show a 13% y-y climb in domestic apparel retail sales. Sales at department stores, a major channel in the fashion category, expanded 39% y-y. And, online sales increased 11% y-y, showing a higher growth rate than 2Q22, when the industry as a whole recorded good results. We mainly attribute this robust sales growth in July to both brisk sales of swimwear and suitcases during summer vacation season and regular sales season at the three main department store groups. Despite a severe rainy season, healthy top-line growth likely sustained in August on solid demand, helped by relatively low base burden, department store renewals, pop-up store events, and brand collaboration product launches. Based upon September autumn/winter season sales projections, 3Q22 earnings for the sector should prove substantial. Domestic apparel retail sales upped 13% y-y in July Domestic apparel retail sales rose 13% y-y in July, outpacing the average growth rate seen in 2Q22 (+10% y-y). Department stores (+39% y-y), hypermarkets (+12% y-y), and online retailers (+11% y-y) all recorded double-digit sales growth, with all channels performing well. At department store channels, fashion category sales increased 39% y-y on average, dividing as women’s suits (+38% y-y), women’s casual (+41% y-y), men’s clothing (+38% y-y), children’s/sports (+48% y-y), and major overseas brands (+29% y-y). This is a significant growth rate even compared to the average growth rate for apparel witnessed in 2Q22 (+23% y-y). Among online channels, fashion category sales expanded 11% y-y. The overall domestic online growth rate in July was +9% y-y, falling to the single digits for the first time this year. We attribute this slowing to the fact that overall consumption has shifted to offline channels in line with increased outdoor activities and the summer vacation season. However, fashion categories (clothes+shoes+bags+goods+sports) among consumer goods excluding services displayed solid growth rates. Although the number of domestic and foreign visitors at DFSs upped 111% y-y in July, dollar-denominated sales at DFS channels fell 17% y-y, drained by a 23% y-y decline in foreign sales. In particular, foreign sales at in-city DFSs, where daigous account for a high portion of sales, slid 23% y-y, continuing their slump following 2Q22.