[Click eStock] "Lotte Hi-Mart, Poor Performance in Q2 Again... Target Price Down"

NH Investment & Securities announced on the 16th that it has lowered the target price for Lotte Hi-Mart by 13% to 10,000 KRW, reflecting the sluggish second-quarter performance and market conditions. The investment rating was maintained at 'Hold.'

Researcher Ju Young-hoon stated, "Lotte Hi-Mart is undergoing intensive structural improvements to regain competitiveness in the home appliance market. Stores deemed unsalvageable are being closed, while key stores are being renewed, and it is positive that results from these efforts are beginning to appear."

However, he added, "Due to unfavorable business conditions such as economic recession and a decrease in new housing supply, the recovery pace is slower than initially expected, which is regrettable. The company plans to strengthen additional strategies in the second half to improve performance."

He explained, "Starting from July, individual brand sales staff have been newly hired as direct employees who can sell all brands, securing sales expertise. Additionally, by expanding the introduction of global brands, the current sales proportion of the five major brands, which accounts for 71%, will be lowered to provide customers with more diverse choices."

He further anticipated, "Since significant cost reductions have already been achieved, if sales recovery becomes visible through these strategies, profitability improvement is also expected to accompany it."

The second-quarter performance was weak. On a separate basis, sales and operating profit decreased by 13% and 64% year-on-year to 589.3 billion KRW and 2.8 billion KRW, respectively.

Researcher Ju Young-hoon noted, "Due to the economic slowdown, domestic demand for home appliance replacement declined, and the impact of closing underperforming stores further contributed to the continued sales decline. Although stores that completed renewal saw a 15% increase in sales in the first half compared to the previous year, their low proportion of total sales prevented overall performance improvement."

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