South Korea's Store Sales Decline for First Time in Nine Months

By William Sim

Oct. 16 (Bloomberg) -- South Korea's department store sales declined for the first time in nine months in September, adding to signs the economy is cooling.

Sales at the nation's three biggest chains fell 0.3 percent from a year earlier, following a 14 percent gain in August, the Ministry of Knowledge Economy said in Gwacheon today.

Rising living costs and the benchmark stock index's 29 percent drop this year have eroded consumer confidence and cooled sales for retailers including by Lotte Shopping Co. The Bank of Korea this month cut interest rates for the first time in four years, joining global central bank efforts to stem economic fallout from the deepening financial crisis.

Shares in Lotte Shopping, the nation's largest department store operator, have fallen 48 percent in 2008, and those in Hyundai Department Store Co., the second biggest, have dropped 35 percent.

South Korea added the fewest number of jobs in almost four years last month as the faltering economy prompted manufacturers and builders to fire workers.

The $970 billion economy grew 4.8 percent in the second quarter, the weakest pace in more than a year, as consumers cut spending. The government last month announced almost $20 billion in tax cuts for workers and small businesses to try to bolster faltering domestic demand.

Sales of men's clothing dropped 13.8 percent in September from a year earlier and spending on household goods fell 9.5 percent, today's report showed.

Sales of luxury goods at department stores climbed 24.7 percent, the smallest increase in six months.

Spending at discount stores slumped 9.2 percent from a year earlier, the biggest drop in 11 months, following a 1.1 percent gain in August, according to today's figures.

To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net.