"Lotte Shopping Driven by Strong Department Store Performance... Target Price Raised" [Click e-Stock]

On April 15, LS Securities raised its target price for Lotte Shopping to 135,000 won and maintained a "buy" rating, citing strong performance in the department store business as a key driver of the company's overall results.

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LS Securities projected that, on a consolidated basis, Lotte Shopping's first-quarter sales would reach 3.5765 trillion won (up 3.5% year-on-year), with operating profit at 206.8 billion won (up 39.5%). This is in line with market expectations.

The company specifically estimated that the same-store sales growth rate for department stores, led by luxury goods and domestic fashion, would be around 13%. For discount stores, the first-quarter same-store sales growth rate is expected to be 1%, and for supermarkets, -0.1%.

While solid profits are also expected from Cultureworks and the home shopping business, LS Securities noted that Hi-Mart is unlikely to see a significant short-term rebound, as the recovery in the large home appliance market has been delayed due to softened demand.

LS Securities analyst Oh Rina commented, "We expect some cost burden in the second half of the year due to the start of operations at the automated logistics center (Ocado CFC) within the discount store business. Although initial promotion costs will likely be needed as Naver and Kurly are strengthening their fresh food services, the strong performance of the department store business is expected to ensure the stability of the company's overall profits."

Oh further added, "Although overseas business still represents a very small portion of consolidated results, it is clearly a growth driver in the mid- to long-term, so it warrants continued attention."

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