Sales of 3.9019 trillion KRW... Operating Profit Up 882.2%
Net Profit 45.5 billion KRW 'Turned Positive'
[Asia Economy Reporter Lim Chun-han] Lotte Shopping has broken free from years of poor performance and recorded an earnings surprise that exceeded market expectations. The department store and Culture Works divisions saw significant improvements in performance, and the mart division also turned a profit in the first half of the year.
Lotte Shopping announced on the 5th that its consolidated operating profit for the second quarter of this year was tentatively estimated at 74.4 billion KRW, an increase of 882.2% compared to the same period last year. Sales were 3.9019 trillion KRW, showing no change compared to the same period last year. Net profit turned positive at 45.5 billion KRW.
For the first half of the year, sales decreased by 1.4% to 7.6727 trillion KRW, but operating profit increased by 106.3% to 143.1 billion KRW, and net profit also turned positive at 114.6 billion KRW. This is the first time in three years since 2019 that net profit has been positive for the first half of the year.
By business division, the reopening of economic activities led to a significant improvement in department store performance. The department store recorded sales of 828.5 billion KRW (14.9%) and operating profit of 104.2 billion KRW (68.5%) in the second quarter. With the easing of social distancing, overseas fashion (17.9%), men's, sports, and children's fashion (16.8%), and women's fashion (+14.9%) sold well.
The mart division also turned a profit in the first half with an operating profit of 9.3 billion KRW, supported by the success of Zeta Flex and Bottle Bunker. Sales in the second quarter increased by 1.2% to 1.441 trillion KRW, driven by growth in alcoholic beverages (16.0%) and processed foods (9.0%), and the operating loss narrowed to 7.1 billion KRW. Culture Works also recorded sales of 121.4 billion KRW (180.6%) and operating profit of 10.5 billion KRW (turned profitable) in the second quarter, thanks to the consecutive success of blockbuster movies.
The supermarket business continued efficiency improvements by closing 23 stores in the second quarter, but sales decreased by 7.1% due to reduced demand for home dining, and the deficit widened. Lotte On and Hi-Mart continued to struggle. E-commerce sales decreased by 10.5%, and operating losses widened to 49.2 billion KRW. Hi-Mart's sales fell by 10.2%, and operating profit dropped by 99.2% to 300 million KRW. Home shopping's operating profit decreased by 9.6% due to increased selling and administrative expenses such as transmission fees, but handling volume increased by 3.6% in the first half due to increased travel-related sales.
Choi Young-jun, head of finance at Lotte Shopping, said, "We have finished laying the groundwork and are preparing to leap forward as the number one distribution hub again," adding, "We are closely monitoring external environmental changes such as exchange rates along with concerns about consumption contraction due to rising prices in the second half."
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