[Click eStock] "Lotte Hi-Mart, Strong Home Appliance Sales and Continued Effects of Restructuring Expected"

Hi Investment & Securities Report
Q4 Operating Profit 20.2 Billion KRW... 218% Increase YoY

[Asia Economy Reporter Minji Lee] Hi Investment & Securities maintained a buy rating on Lotte Hi-Mart on the 11th and raised the target price by 10.3% from the previous level to 43,000 KRW. This is based on the judgment that the effects of home appliance sales and restructuring could continue this year as well.

In the fourth quarter, Lotte Hi-Mart is estimated to have recorded sales of 960.7 billion KRW and operating profit of 20.2 billion KRW, increasing by 2.7% and 218.6% respectively compared to the same period last year. The strong home appliance sales are expected to continue in the fourth quarter, leading to a significant improvement in operating profit compared to the previous year.

By product category, due to the ongoing COVID-19 pandemic, sales of video home appliances such as TVs are estimated to have grown by double digits compared to a year ago in the fourth quarter. Among white goods, sales of clothes dryers and clothing care appliances stood out. In particular, clothing care appliances likely maintained steady double-digit growth as interest in personal hygiene increased due to COVID-19. Additionally, PC demand is presumed to have been favorable due to work-from-home needs, and online sales appear to have continued growing at around 20%.

On the cost side, a trend of decreasing selling and administrative expenses is expected to have continued. Researcher Junyoung Ha of Hi Investment & Securities explained, “Regarding advertising costs, expenses were likely reduced by using new media such as live broadcasts instead of traditional media like TV commercials.”

Home appliance sales are also expected to remain strong this year. This is because the spread and stabilization of COVID-19 are projected to continue through the first half of the year. Researcher Ha said, “As consumers continue to spend more time at home in the first half, home appliance sales are expected to increase during this period as well,” adding, “The rationalization of stores through restructuring and the trend of decreasing selling and administrative expenses will also continue.”

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