Lotte Shopping, Only Department Stores Smiled... Operating Profit Down 28.3% Last Year

[Asia Economy Reporter Seungjin Lee] Lotte Shopping increased its deficit last year due to sluggish performance in discount stores and supermarkets despite improved results in department stores. On the 13th, Lotte Shopping announced that its operating profit for last year was 427.9 billion KRW, down 28.3% compared to the same period last year. Sales decreased by 1.1% to 17.6328 trillion KRW, and net loss widened to 853.6 billion KRW.

Operating profit in the fourth quarter was 43.6 billion KRW, down 51.8% from the same period last year. Fourth-quarter sales were 4.3248 trillion KRW, down 1.7% year-on-year, and net loss expanded to 1.0164 trillion KRW. It is analyzed that poor performance continued due to declining sales of offline retailers such as discount stores and supermarkets last year and increased costs due to efficiency measures. The decline in sales and profits is attributed to the continuous growth of the online market, a decrease in Chinese tourists, and factors such as minimum wage increases.

The fortunes of offline retailers such as discount stores and supermarkets, excluding department stores, sharply diverged. Department stores recorded annual sales of 3.1304 trillion KRW and operating profit of 519.4 billion KRW. In the fourth quarter, despite sluggish domestic consumption, sales of 866.2 billion KRW and operating profit of 182.5 billion KRW were achieved. Operating profit grew 22.3% annually and 34.5% in the fourth quarter.

Domestic department stores saw sales increase mainly in overseas fashion product lines, but overall sales slightly decreased due to poor clothing sales such as winter outerwear. However, operating losses significantly improved due to the closure of overseas department stores (Tianjin Cultural Center, Weihai branch) in March last year. Discount stores recorded annual sales of 6.3306 trillion KRW and an operating loss of 24.8 billion KRW, turning to a deficit. In the fourth quarter, sales reached 1.4739 trillion KRW, but operating loss widened to 22.7 billion KRW.

Domestic discount stores continued to suffer from sluggish business conditions, expanding operating losses due to poor sales, while overseas existing stores in Vietnam and Indonesia saw sales increase by 8.9%. However, operating profit decreased by 4.6%. Hi-Mart, an electronics specialty store, recorded annual sales of 4.0265 trillion KRW and operating profit of 109.9 billion KRW. Fourth-quarter sales declined by 2.6% due to a slowdown in the domestic home appliance market growth.

This year, Lotte Shopping plans to improve profitability by closing inefficient offline stores (11 stores) and enhancing store efficiency through store enlargement. They plan to expand mega stores and premium home appliance stores that propose home appliances and lifestyle products by strengthening premium-focused MD.

Supermarkets recorded annual sales of 1.8612 trillion KRW and an operating loss of 103.8 billion KRW. Due to reduced operating days caused by store closures and renovations, fourth-quarter sales were 437.7 billion KRW, and operating loss was 42.8 billion KRW. They plan to actively reduce direct business deficits through aggressive restructuring going forward.

A Lotte Shopping official said, "Last year was a more difficult time than ever due to the overall deterioration of the domestic consumption economy and intensified competition between online and offline markets, but department stores relatively held up well with a 22.3% increase in operating profit through proactive restructuring of inefficient domestic and overseas stores." He added, "This year, additional efficiency improvements will be carried out based on the profitability of stores such as department stores, marts, and supermarkets."

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