Lotte Shopping's Performance Last Year Fell Below Expectations... "Full-Scale Structural Improvement This Year" (Comprehensive)

Operating profit of 215.6 billion KRW last year...37.7% decrease
Sales of 15.5812 trillion KRW, down 3.7%
Department stores hold steady but marts and e-commerce struggle
Determined to restructure... "The first year of structural improvement"

Lotte Department Store Main Branch.

[Asia Economy Reporter Kim Yuri] Lotte Shopping received a performance report last year that fell short of expectations. Due to the impact of restructuring measures such as voluntary retirement programs at department stores and marts, operating profit decreased by more than 37% compared to the previous year. Lotte Shopping aims to turn the tide this year based on structural improvements.

On the 8th, Lotte Shopping announced that its consolidated operating profit for last year was 215.6 billion KRW, down 37.7% from the previous year. During the same period, sales amounted to 15.5812 trillion KRW, a 3.7% decrease. These figures slightly missed the financial investment industry's sales estimate (consensus) of 15.7007 trillion KRW and operating profit estimate of 247 billion KRW. Net loss narrowed to 286.8 billion KRW.

In the fourth quarter of last year, Lotte Shopping's operating profit was 117.4 billion KRW, down 35.3% year-on-year. Sales during the same period were 3.7919 trillion KRW, a 4.1% decrease.

The department store segment performed well in the fourth quarter of last year. It was explained that due to the base effect from the previous year, there was steady sales growth across all product categories. Sales reached 835 billion KRW, up 9.4% year-on-year, and operating profit was 205 billion KRW, up 15.7%. Notably, the overseas fashion category (25.5%) including luxury goods and the men's sports category (10.4%) showed remarkable growth. Including these, the department store's sales last year were 2.888 trillion KRW, and operating profit was 349 billion KRW, increasing 8.8% and 6.4% respectively compared to the previous year. This year, the plan is to strengthen the luxury lineup at key stores and upgrade the premium food hall. They also plan to expand future-oriented large stores like the Lotte Department Store Dongtan branch, which opened last year.

The mart segment saw sales of 1.335 trillion KRW in the fourth quarter of last year, down 5.0%, and recorded an operating loss of 18 billion KRW due to one-time costs related to voluntary retirement. Store closures, remodeling into warehouse discount stores, and a slowdown in home meal demand affected performance. Last year’s sales were 5.716 trillion KRW, down 7.2% from the previous year, with an operating loss of 32 billion KRW.

The supermarket segment’s sales last year were 1.452 trillion KRW, down 12.3% from the previous year, with an operating loss of 5 billion KRW. Although overall sales declined due to a reduction in the number of stores from restructuring and remodeling, they carried out restructuring by closing 146 underperforming stores over two years, which helped reduce operating losses.

E-commerce sales in the fourth quarter of last year were 28 billion KRW, down 8.2%, with an operating loss of 49 billion KRW. Last year’s sales decreased 21.5% year-on-year to 108 billion KRW, and operating loss was 156 billion KRW. Despite struggles caused by increased logistics and labor costs and the integration and transfer of the online business under the e-commerce division last year, the strengthening of the platform capabilities of the integrated mall Lotte On was considered meaningful.

The electronics specialty store (Lotte Hi-Mart) was affected by a base effect from the COVID-19 special demand in 2020, resulting in sluggish sales centered on white goods. Last year’s sales were 3.877 trillion KRW, and operating profit was 113 billion KRW, down 4.3% and 29.6% respectively compared to the previous year.

Home shopping sales increased 2.5% to 1.103 trillion KRW, but operating profit (102 billion KRW) decreased 18.5% due to increased selling and administrative expenses such as platform new business operation costs.

Culture Works’ movie theater business was affected by the COVID-19 situation, with sales (235 billion KRW) down 11.6%, but operating loss was reduced through efficiency improvements in selling and administrative expenses.

A Lotte Shopping official said, "This year, we will strengthen the core competitiveness of each business division to achieve a performance rebound," and added, "Visible results will also be seen from investments made last year to secure future growth engines."

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