Lotte Hi-Mart's Intensive Structural Improvement Pays Off... Annual Profit Outlook Brightens

Operating Profit of 36.2 Billion KRW in Q3... Profitability Continues from Q2
Effective Inventory Management, Store Renovation, and Strengthening of PB Products

Lotte Hi-Mart achieved a profit in the third quarter as well, following the second quarter, thanks to its intensive structural improvements.

Nam Chang-hee, CEO of Lotte Hi-Mart

According to the Financial Supervisory Service disclosure system on the 23rd, Lotte Hi-Mart's operating profit for the third quarter was 36.2 billion KRW, and net profit was 27 billion KRW, far exceeding the securities market forecast (operating profit of 12 billion KRW). In the third quarter of last year, the company recorded an operating profit of 700 million KRW and a net loss of 370.3 billion KRW, effectively operating at a loss, but this year it achieved a 5180% growth compared to the previous year and successfully turned to profitability. Even excluding one-time income from value-added tax refunds, the operating profit was close to 10 billion KRW in the black. Sales amounted to 735.9 billion KRW, down 17% compared to the same period. Lotte Hi-Mart also advanced its earnings announcement date by about two weeks compared to previous years in the third quarter, which is interpreted as a sign of confidence in its performance.

Reducing the overall inventory size was effective. This was the area that Nam Chang-hee, CEO of Lotte Hi-Mart, has been most attentive to managing since his appointment in December last year. An increase in inventory means the company's cash is tied up. To strengthen profitability, CEO Nam improved the system to efficiently manage products by grading them based on the timing of product introduction and sales trends. This reduced unnecessary product orders and increased the proportion of new and popular products.

Lotte Hi-Mart Cheongnyangni Lotte Mart Branch Home All-Purpose Solution Center.

Strengthening competitiveness through store renewals was also positive. The company has been promoting store renewals starting with the Cheongnyangni Lotte Mart store at the end of April. So far, a total of 22 stores have been renewed. Products were differentiated through customized MD reorganization by commercial district, and a dedicated consultation channel for K-service, the ‘Home All-Purpose Center,’ was installed to enhance store competitiveness. As a result, sales at renewed stores increased by about 33%, and after the installation of the Home All-Purpose Center, customers using total care services such as home appliance cleaning, extended warranty insurance, and repairs increased about fourfold compared to before. The number of renewed stores is planned to expand to 50 by the end of this year and 100 by the end of next year.

Going forward, the company plans to strengthen its private brand (PB) ‘Hi-Made’ by offering products that are affordable yet not inferior to premium products in design and functionality. A Lotte Hi-Mart official said, "Despite the challenging home appliance market conditions, Hi-Made continues to show steady growth," adding, "We are also promoting a brand renewal to enhance competitiveness in design, marketing strategy, and production."

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