[Click e-Stock] "Lotte Shopping to Rebound in Q4 Department Stores and Discount Stores... Target Price Maintained"

On November 10, Kiwoom Securities maintained its "Buy" investment rating and a target price of 95,000 won for Lotte Shopping, stating, "Driven by robust domestic consumption and an increase in inbound foreign tourists, performance improvements centered on domestic department stores are expected to continue."

Park Sangjun, a researcher at Kiwoom Securities, commented, "Considering next year's price-to-earnings ratio (PER) and dividend yield level (5.7%), the absolute valuation attractiveness is also very high."

Lotte Shopping's operating profit for the third quarter was 130.5 billion won, a 16% decrease compared to the same period last year. Researcher Park explained, "Operating profit from domestic discount stores underperformed expectations due to widening losses in e-grocery (food) operations and sluggish same-store sales. However, Cultureworks delivered better-than-expected results thanks to cost reductions and the effect of movie discount coupons."

Domestic department stores achieved a same-store sales growth rate of 2.8% year-on-year, supported by a rebound in consumer sentiment. However, domestic discount stores posted a disappointing minus 13% same-store sales growth rate, negatively affected by being excluded as eligible locations for livelihood recovery consumption coupons and differences in holiday timing. Park noted, "In the fourth quarter, both department stores and discount stores are expected to show solid same-store sales growth, as strong domestic consumption and positive effects from holiday timing overlap."

In particular, department stores saw their October same-store sales growth rebound to around 10%, and sales in the highly profitable fashion category are also experiencing rapid growth. Park pointed out, "Since one-off costs related to ordinary wages were reflected in the mid-30 billion won range for both department stores and discount stores in the fourth quarter of last year, a significant improvement in profitability is expected this fourth quarter."

The sharp increase in the proportion of foreigner sales is also encouraging. Park emphasized, "In the third quarter, Lotte Shopping's main and Jamsil department stores saw foreigner sales grow by 34% year-on-year. As the global recognition of Korean Wave content rises, interest among foreigners in traveling to Korea is strengthening. Foreigner sales are expected to become a structural growth driver for department store sales."

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