[Click eStock] Lotte Hi-Mart Faces Challenges in the Second Half of This Year as Well

[Asia Economy Reporter Junho Hwang] Lotte Hi-Mart posted results below market expectations for the second quarter of this year, and on the 9th, Heungkuk Securities lowered its target stock price to 20,000 KRW per share, expressing concerns over weakened consumer sentiment due to high interest rates and high inflation.

Lotte Hi-Mart announced that its separate sales for the second quarter of this year amounted to 88.5 billion KRW, a 10.2% decrease compared to the previous year. Operating profit also dropped sharply by 99.2% year-on-year to 300 million KRW. The main reasons for the decline in performance were attributed to last year's high base effect and the disappearance of the special demand caused by COVID-19. In particular, sluggish sales of high-margin large home appliances such as refrigerators and washing machines, as well as the increasing proportion of sales through online channels, had a significant impact.

Researcher Jongryeol Park of Heungkuk Securities stated, "Considering the stagnation of the domestic home appliance market following the end of replacement demand after the COVID-19 pandemic, along with weakened consumer sentiment due to high interest rates and high inflation, poor performance is expected to continue in the second half of this year."

Lotte Hi-Mart plans to reduce 24 stores this year (22 road stores and 2 mart stores), following last year's reduction of 21 stores (17 road stores and 4 mart stores). Researcher Park analyzed, "Although sales per store will improve through store diversification, the overall sales growth will not be strong due to the decrease in the average number of stores."