Lotte Shopping Vice Chairman Kim Sang-hyun Faces Harsh Criticism at General Meeting... His Response

Lotte Shopping to Hold Shareholders' Meeting on 26th
Vice Chairman Kim: "Best Effort for Performance Improvement and Stock Recovery This Year"
Lotte PB to Pursue Global Expansion

"I am a shareholder who said last year at this very spot that stock price recovery should take priority over dividend expansion. The stock price has fallen again compared to last year, so where exactly is the shareholder value enhancement?"

On the morning of the 26th, at the Lotte Retail Academy in Yeongdeungpo-dong, Yeongdeungpo-gu, Seoul, the regular shareholders' meeting of Lotte Shopping was held. When Kim Sang-hyun, Vice Chairman of Lotte Shopping and the chairman of the meeting, presented the agenda for the approval of Lotte Shopping's financial statements for the previous year, shareholder A raised his hand and asked this question. It was a pointed remark that to increase shareholder value, the company should focus on boosting the stock price rather than increasing dividends.

On the 26th, at the Lotte Retail Academy in Yeongdeungpo-dong, Yeongdeungpo-gu, Seoul, Kim Sang-hyun, Vice Chairman of Lotte Shopping (center), is speaking at the 54th regular shareholders' meeting of Lotte Shopping.
[Photo by Lotte Shopping]

The agenda for the approval of Lotte Shopping's financial statements included a cash dividend payment of 3,800 KRW per common share. This is an increase of 500 KRW compared to 3,300 KRW in 2022, the previous year. However, Lotte Shopping's stock price has been trading at a lower level than last year. As of the most recent trading day on the 25th, Lotte Shopping's closing price was 72,900 KRW, about 8.5% lower than 79,700 KRW on March 24, 2023, one year ago.

Vice Chairman Kim explained the reasons for the stock price slump, saying, "The stock price declined due to a combination of negative factors such as exclusion from the Morgan Stanley Capital International (MSCI) index and the downgrade of credit ratings of Lotte affiliates." He added, "Although the stock price showed a positive trend after posting results exceeding the consensus (market forecast) in the fourth quarter of last year, it has recently been declining following profit-taking sales and the announcement of the corporate value-up program."

Regarding the reason for increasing dividends, he said, "Dividends were increased as the retail market grew following the endemic phase of the pandemic in 2022, and we improved performance by securing financial soundness through business structure improvement and profit-oriented management." He added, "This year as well, we will do our best to recover the stock price through performance improvement in key business divisions."

Meanwhile, Vice Chairman Kim presented the goal of promoting 'Transformation 2.0,' which aims for simultaneous growth in sales and profits along with profitability improvement, at the shareholders' meeting. He emphasized, "While we have focused on profitability improvement through Transformation so far, from this year onward, we will accelerate 'Transformation 2.0,' which aims for simultaneous growth in sales and profits."

He also mentioned new growth businesses such as artificial intelligence (AI), mixed-use development in Southeast Asia, and exports of grocery private brand (PB) products. Vice Chairman Kim explained, "Lotte Shopping established its own AI organization called Lilac AI in September last year, and in the Southeast Asian market, we are reviewing additional mixed-use development projects based on the successful experience of Lotte Mall Hanoi." Regarding the export of grocery PB products, he said, "We will actively respond to the demand for K-food and K-culture in the global market and promote the global expansion of grocery PB products, focusing on the Southeast Asian market."

By business division, the department store division plans to focus on renewing core stores. Vice Chairman Kim said, "In the long term, we will focus on developing mixed-use shopping malls that can become regional landmarks." He added, "In overseas business, we will improve the profitability of existing Southeast Asian stores including Lotte Mall Hanoi and establish strategies to open stores on sites with high growth potential."

The mart division will seek synergy through integrated operations with the supermarket division. While accelerating the renewal of specialized stores such as Grand Grocery, it will strengthen fresh food and PB products. The e-commerce business division will shift its management strategy to focus on profitability and innovate the online logistics system together with Ocado. In December last year, Lotte Shopping held a groundbreaking ceremony for a logistics center in Busan with the British retail tech company Ocado. This center will apply the Ocado Smart Platform (OSP) integrated solution.

Affiliates such as Lotte Hi-Mart and Lotte Home Shopping, which have experienced poor performance, will focus on improving profitability. Vice Chairman Kim stated in the business report, "We will concentrate on restoring the profitability of subsidiaries that are recording poor performance," and explained, "We will improve profitability through intensive business restructuring of Lotte Hi-Mart and the home shopping business, which have seen a sharp decline in performance since the reopening of economic activities after the COVID-19 pandemic."

On the 26th, the 54th regular shareholders' meeting of Lotte Shopping is being held at the Lotte Retail Academy located in Yeongdeungpo-dong, Yeongdeungpo-gu, Seoul.
[Photo by Lotte Shopping]

After the shareholders' meeting, Vice Chairman Kim met with reporters and said, "As always, we will strive to become the shopping destination that customers want," adding, "We will also work hard to generate both sales and profits in new businesses, focusing on overseas markets."