Operating Profit Jumps 70%... Lotte Shopping Achieves First-Quarter Earnings Surprise Driven by Department Stores

Operating Profit Up 70.6% Year-on-Year
Domestic Department Stores Benefit from Surge in Foreign Tourists
Overseas Growth Driven by Vietnam
Mart Division Improves Profitability, Subsidiaries Also Rebound

Lotte Shopping achieved an earnings surprise in the first quarter of this year, driven by strong performance in its core department store division. Profitability improved at both domestic and overseas department stores, thanks to a rise in foreign tourist numbers and increased sales of high-margin products. Subsidiaries also reported mostly improved results through robust management practices.

Exterior of Lotte Department Store Main Branch. Provided by Lotte Department Store

Lotte Shopping announced in a regulatory filing on the 11th that, on a consolidated basis, operating profit for the first quarter of this year was provisionally estimated at KRW 252.9 billion, up 70.6% from the same period last year. During the same period, revenue grew by 3.6% to KRW 3.5816 trillion, and net profit surged by 694.1% to KRW 143.9 billion.

Department Stores See Gains Domestically and Record-Breaking Overseas Quarterly Results

The strong first-quarter performance at Lotte Shopping was led by its department store division. Department store sales for the first quarter reached KRW 872.3 billion, with operating profit at KRW 191.2 billion, representing year-on-year increases of 8.2% and 47.1%, respectively. Major domestic department stores—including the main branch, Jamsil branch, and Busan main branch—posted a 19% increase in sales compared to the same period last year, while sales to foreign tourists soared by 92%. As a result, same-store sales grew by 13%. In particular, the main branch saw sales to foreign customers more than double (up 103% year-on-year), with their share of total sales expanding to 23%.

Overseas department store business sales rose by 14.7% year-on-year to KRW 35.5 billion, while operating profit soared by 268.7% to KRW 7.6 billion. Lotte Mall West Lake Hanoi in Vietnam, now in its fourth year of operations, set a new quarterly record for operating profit at KRW 4.9 billion, driving the overseas growth. By region, Vietnam saw a 28% increase and Indonesia a 7% increase, continuing the growth trend in total sales across all overseas locations.

For the second quarter, Lotte Department Store plans to further attract foreign customers by strengthening K-content-based merchandising and marketing, such as "Kinetic Ground" at the main and Jamsil branches. The company also expects continued sales growth through the year, as newly renovated food halls at the Nowon branch in Seoul and the Incheon branch begin to show results.

Hypermarket Division Focuses on Structural Improvement and Overseas Growth

The hypermarket division, which operates Lotte Mart, recorded first-quarter revenue of KRW 1.5256 trillion, up 2.6% year-on-year, and operating profit of KRW 33.8 billion, up 20.2%, reflecting profitability-driven growth. Specifically, domestic hypermarkets achieved operating profit of KRW 8.8 billion, a 30.9% increase over the same period last year, thanks to efficient promotional activities and a rebound in sales that lowered selling and administrative expense ratios.

Visitors, both domestic and international, are waiting to make payments at Lotte Mart ZetaPlex Seoul Station branch. Provided by Lotte Mart

Overseas operations, led by Vietnam, saw balanced growth across all product categories, with revenue rising 3.4% year-on-year to KRW 485 billion and operating profit increasing 16.8% to KRW 25 billion. However, the supermarket division maintained revenue at a similar level as last year at KRW 305.8 billion, while operating profit declined by 30.7% to KRW 2.2 billion.

The hypermarket division aims to enhance brand competitiveness and draw more customers through regular promotions such as the "Tongkeun Day" campaign, which focuses on innovation in fresh food quality and strengthening private label (PB) products. Online, the division plans to boost its grocery competitiveness with the launch of the "Zeta Smart Center Busan," which utilizes the UK's Ocado Smart Platform (OSP). In overseas markets, the company intends to continue opening new stores and renovating existing locations in Vietnam.

Home Shopping and Cultureworks Improve Profitability, While e-Commerce and Hi-Mart Lag

Among consolidated subsidiaries, Lotte Home Shopping posted a 2.1% year-on-year increase in revenue to KRW 232.4 billion, with operating profit soaring 118.6% to KRW 26.4 billion. This improvement was due to a portfolio focused on high-margin products such as health supplements and beauty items, as well as expanded content commerce based on social networking services (SNS).

Cultureworks, which oversees the film business, also benefited from the recovery of domestic cinemas, with revenue rising 44.4% year-on-year to KRW 124.6 billion and operating profit turning to a surplus at KRW 7.9 billion.

On the other hand, Lotte Hi-Mart, the consumer electronics retail subsidiary, saw its operating loss worsen to KRW 14.8 billion in the first quarter due to a sluggish electronics market and a downturn in the real estate sector, increasing losses compared to the same period last year. The e-commerce division narrowed its operating loss by KRW 2.7 billion year-on-year—thanks to improved profitability in core categories such as fashion and beauty, and increased advertising revenue—but still posted a first-quarter operating loss of KRW 5.8 billion.

Lim Jaecheol, Chief Financial Officer at Lotte Shopping, stated, "In the first quarter of this year, we achieved remarkable results based on solid performance in department stores and improved profitability among our subsidiaries. Going forward, we will continue to strengthen the core competitiveness of our domestic business and solidify sustainable growth drivers by expanding our overseas operations."

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