[Exclusive] Lotte Group Ahead of Personnel Changes... Lotte Asset Development Split and Lotte Shopping Workforce Slimming

Lotte Asset Development Disbands Each Business Division and Incorporates Them into Affiliates
Affiliate Workforce Restructuring, Lotte Shopping Adjusts Around 70 Employees

[Asia Economy Reporter Lim Hye-seon] This summer, following a 'major personnel reshuffle,' Shin Dong-bin, Chairman of Lotte Group (pictured), has put the entire group on the operating table. He has begun restructuring by liquidating underperforming affiliates and implementing workforce reductions. The process will continue through the regular personnel reshuffle at the end of this month, aiming to finalize the foundation for the group's centennial vision.

According to business circles on the 10th, Lotte Group will integrate the domestic business division of its affiliate Lotte Asset Development into each relevant subsidiary. Kang Hee-tae, head of Lotte's Distribution Business Unit, who took office this year, is leading the effort. Although the group initially considered liquidating Lotte Asset Development entirely, it decided to retain its overseas business operations. Lotte Asset Development directly manages local projects in Vietnam and China.

The shopping mall operations, youth housing projects, and facility management divisions will be transferred to related affiliates respectively. All domestic operations will be wound down. A senior Lotte Group official explained, "The youth housing projects will be handed over to Lotte Construction, shopping mall operations to Lotte Shopping, and facility management will be managed by Lotte Property & Development."

Lotte Group established Lotte Asset Development as a comprehensive development company in July 2007. It conducted projects involving the development of real estate owned by the group or the acquisition and development of new land. It was also responsible for asset management and development projects related to the group's retail facilities such as shopping malls, department stores, and large marts, including project financing (PF) and permits.

The reason for winding down Lotte Asset Development is that it is no longer deemed viable on its own. The profitability of Lotte Asset Development has been deteriorating over recent years. Last year, it recorded sales of 166.5 billion KRW but an operating loss of 15.1 billion KRW, marking three consecutive years of losses and leading to capital erosion. The impact of the COVID-19 pandemic is expected to continue into next year, making it difficult to find a breakthrough. Consequently, a large-scale voluntary retirement program began last month. So far, over 100 employees have applied for voluntary retirement, accounting for more than one-third of the total workforce.

Workforce adjustments are being carried out not only at Lotte Asset Development but across the group's affiliates. Lotte Shopping is streamlining its workforce targeting long-term employees at the same rank. The target groups include senior employees, those nearing retirement, professionals who have remained at the same rank for an extended period, and employees just before the wage peak system. The ranks involved range from assistant manager to manager, deputy general manager, and general manager. The scale is about 70 employees. Retirees will receive severance pay calculated based on their years of service, plus additional retirement consolation pay. The consolation pay is expected to be equivalent to two years of base salary on top of the severance pay. Hotel Lotte and Lotte Hi-Mart have already conducted voluntary and honorary retirement programs. Lotte Hotel implemented honorary retirement for employees aged 58 and above (born between 1961 and 1963) entering the wage peak system for the first time in 16 years. Lotte Hi-Mart accepted voluntary retirement applications from about 80 employees on its 20th anniversary. Inside Lotte Group, it is anticipated that the upcoming personnel reshuffle this month will reduce executives by 30%.

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