Did They Barely Pass the Low Point... Emart and Lotte Shopping Prepare to Rebound

[Asia Economy Reporter Ko Hyung-kwang] The stock prices of the two major distribution companies, Lotte Shopping and Emart, have recently been on the rise. After hitting historic lows due to last year's worst slump, they are showing signs of recovery through restructuring and profitability improvement.

According to the Korea Exchange on the 15th, Emart closed at 124,000 KRW, up 3.3% on the previous day in the KOSPI market. Compared to the stock price of 104,500 KRW five months ago, this represents an 18.6% increase. Lotte Shopping, which closed at 137,500 KRW, up 1.8% the previous day, also rose 15.5% compared to its mid-August last year price of 119,000 KRW.

In the second half of last year, both companies saw their stock prices fall to historic lows due to deteriorating business performance caused by consumer recession and intensified online competition. Emart's stock price was the lowest in eight years since its spin-off listing from Shinsegae on June 10, 2011, and Lotte Shopping's was the lowest in 11 years since October 27, 2008 (115,000 KRW).

The recent rebound is a positive signal resulting from intensive restructuring. Since October last year, Lotte Shopping has entered an emergency management system by closing underperforming stores and introducing innovative stores. It is also focusing on the online business with the launch of 'Lotte ON,' which it has positioned as a growth engine. Ha Jun-young, a researcher at Hi Investment & Securities, said, "Lotte Shopping is continuously restructuring its department stores, discount stores, and supermarkets," adding, "As a result of ongoing restructuring, profitability is expected to improve in 2020." This year, Lotte Shopping's sales and operating profit are forecasted to increase by 1.6% and 16.8% year-on-year to 18.0692 trillion KRW and 691 billion KRW, respectively.

Emart, after recording a shocking operating loss in the second quarter of last year, is shifting away from expansion and accelerating efforts to improve profitability. Along with this, securing funds through asset securitization of existing stores and steady investment in the online market have also sent positive signals to the market. Emart reportedly secured about 1 trillion KRW by selling 13 stores it owned last year. Emart's operating profit this year is expected to surge 37.7% year-on-year to 292.9 billion KRW. IBK Investment & Securities recently raised Emart's target stock price significantly from 120,000 KRW to 170,000 KRW.

Park Shin-ae, a researcher at KB Securities, said, "Emart is making efforts to improve profitability through restructuring and cost reduction, and the growth rate of online sales is also expected to improve," adding, "There is a possibility that the stock price will rebound due to expectations for this year's performance."

This content was produced with the assistance of AI translation services.