Lotte Shopping Q2 Operating Profit 7.6 Billion Won... "Temporary Tax Reflection at Songdo Lotte Mall" (Comprehensive)

[Asia Economy Reporter Yuri Kim] Lotte Shopping recorded an operating profit of 7.6 billion KRW on a consolidated basis in the second quarter of this year. This figure falls significantly short of the market consensus (estimate) of 77.2 billion KRW. The company explained that a temporary cost of 32.3 billion KRW occurred due to additional taxes (property tax) resulting from construction delays at Songdo Lotte Mall, and excluding this, the second-quarter operating profit is around 39.9 billion KRW.

On the 6th, Lotte Shopping announced that its operating profit for the second quarter of this year was 7.6 billion KRW, a 444.7% increase compared to the same period last year. During the same period, sales decreased by 3.5% to 3.9025 trillion KRW, and the net loss narrowed to 34.5 billion KRW. According to FnGuide, Lotte Shopping’s second-quarter performance estimates were sales of 4.0858 trillion KRW and operating profit of 77.2 billion KRW, meaning the actual results fell short of expectations.

For the first half of this year, sales and operating profit were 7.7826 trillion KRW and 69.4 billion KRW, respectively. Sales decreased by 4.2% compared to the same period last year, while operating profit increased by 29.6%.

The company explained that in the second quarter sales, domestic department stores saw strong same-store sales growth driven by luxury goods and home appliances as consumption recovery continued. Overseas, same-store sales also increased due to the low base effect from COVID-19 last year. Department store sales in the second quarter rose 8.2% to 721 billion KRW.

Domestic discount stores saw an increase in same-store sales centered on food and beverages. However, overseas, same-store sales declined due to strengthened government regulations following the resurgence of COVID-19 in Southeast Asia. Second-quarter discount store sales decreased by 4.8% to 1.424 trillion KRW.

Hi-Mart experienced a sales decline due to sluggish air conditioner sales caused by frequent rain in May and June, recording 988 billion KRW, down 11.4%. Supermarkets saw a decrease in same-store sales, while Culture Works experienced a slight sales increase due to a recovery in movie theater attendance.

Operating profit in the second quarter was 7.6 billion KRW, affected by an increase of 34.4 billion KRW in property taxes compared to the same period last year, resulting in lower operating profit than market estimates. The company stated, "A temporary cost of 32.3 billion KRW occurred due to additional taxes from construction delays at Songdo Lotte Mall," and added, "excluding this, the second-quarter operating profit is around 39.9 billion KRW."

Department store operating profit (62 billion KRW) increased 40.9% year-on-year due to strong same-store sales growth domestically and internationally. Discount stores (operating loss of 26 billion KRW) saw increased same-store sales and reduced selling and administrative expenses domestically, but overseas, restructuring costs in Vietnam were reflected.

Hi-Mart’s operating profit fell 52.3% to 33 billion KRW due to sluggish sales, while losses at supermarkets and Culture Works narrowed.

Meanwhile, supermarket sales decreased 16.8% to 358 billion KRW, recording an operating loss of 2 billion KRW. E-commerce sales dropped 10.4% to 29 billion KRW, with an operating loss of 32 billion KRW. Lotte Homeshopping’s sales increased 4.9% to 273 billion KRW, but operating profit fell 18.1% to 31 billion KRW due to increased broadcasting fees.

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