S. Korea’s February Department-Store, Discount-Store Sales Fall

By Seyoon Kim

March 17 (Bloomberg) -- Sales at South Korea’s major department stores and discount stores fell in February, adding to signs domestic demand is faltering and the economy is headed for a recession.

Sales at the three biggest department-store chains fell 0.3 percent last month from a year earlier, while sales at discount stores slid 20.3 percent, the most since the government started compiling the figures in 2005, the Ministry of Knowledge Economy said in Gwacheon today.

Consumers are reducing spending as the deepening global recession prompts Asian companies to lower production, close factories and cut jobs. The number of employed people in South Korea dropped by 103,000 last month, the most in five years, as retailers and manufacturers fired workers.

To help prop up an economy that the government says may contract for the first time since 1998 this year, South Korea plans to provide cash, loans, school fees and other financial incentives valued at 6 trillion won ($3.9 billion) to help people cope with rising unemployment and falling wages.

The country’s financial regulator said it will create a 40 trillion-won fund to buy distressed corporate bonds and assets from financial companies as the government tries to prevent a recession. Finance Minister Yoon Jeung Hyun plans to unveil an extra stimulus package this month to add to 51 trillion won in tax cuts and infrastructure spending.

Shares in Lotte Shopping Co., South Korea’s largest department-store operator, have lost 37 percent over the past year. Those of Shinsegae Co., which owns department stores and E-Mart, have fallen 21 percent in the same period.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net