Both Emart and Lotte Mart Show Growth Compared to Same Period Last Year
Uninterrupted Discounts and Strengthened Competitiveness Since Early This Year Are the Reasons
Despite severe consumer recession and high inflation, major domestic supermarkets have achieved solid results. It is analyzed that the 'ultra-low price strategy,' which shows strength during recessions, and the focus on 'groceries and daily necessities,' which is the essence of large supermarkets, drove the performance. Large supermarkets plan to continue these strategies in the second half of the year while improving their structure to maintain the performance trend.
On the 16th, Emart announced through a public disclosure that its total sales on a separate basis for the first quarter of this year reached 4.203 trillion KRW, with an operating profit of 93.2 billion KRW. This represents an increase of 93.1 billion KRW (2.3%) in sales and 28.9 billion KRW (44.9%) in operating profit compared to the same period last year. Among these, Emart recorded sales of 3.0338 trillion KRW and operating profit of 51 billion KRW in the first quarter, showing growth rates of 0.6% and 3.0%, respectively, compared to the same period last year.
In particular, the growth of the warehouse discount store Traders is impressive. Traders' sales in the first quarter of this year reached 915.7 billion KRW, up 11.9% from 818.4 billion KRW in the same period last year. Operating profit grew by 313.5% to 30.6 billion KRW from 7.4 billion KRW in the same period last year.
Lotte Mart also showed solid growth. Lotte Shopping announced on the 8th that Lotte Mart's sales in the first quarter of this year were 1.4825 trillion KRW, up 2.5% from 1.4468 trillion KRW in the same period last year, and operating profit increased by 35.3% to 43.2 billion KRW from 31.9 billion KRW in the same period last year. Lotte Super posted sales of 328.7 billion KRW and operating profit of 12 billion KRW in the first quarter, showing growth rates of 0.9% and 42.2%, respectively.
The relatively strong performance of large supermarkets is attributed to the effectiveness of the 'ultra-low price strategy.' Since early this year, Emart has been conducting 'Price Backward Project' and 'Super Sale,' which offer significant discounts on food and daily necessities. Lotte Mart is also continuously running discount events such as 'This Week's Hot Price' and 'Geukrak Deal.' Regarding this, an Emart official explained about the first-quarter performance, "Strengthening price competitiveness and increasing the number of visiting customers were the main factors for performance improvement." In fact, the number of visitors to Emart in the first quarter increased by 830,000 (2.7%) compared to the same period last year.
The strengthening of grocery and daily necessities, the essence of large supermarkets, also draws attention. Lotte Mart reported that the renewal of grocery-focused stores in both marts and supers led to a 4.7% and 4.4% increase in existing store sales, respectively.
Large supermarkets plan to steadily continue these strategies this year. Emart is accelerating the integration of Emart, Emart Everyday, and Emart24. In particular, the scheduled merger date for Emart and Emart Everyday is the 30th of next month, and it is expected that full-scale synergy will be realized from July. The integration of the three companies will lower procurement costs and secure cost competitiveness.
Lotte Mart is improving operating profit through effects such as improved gross profit margin and reduced selling and administrative expenses ratio resulting from the integration of marts and supers. Along with this, marts and supers will continuously strengthen their grocery business through store renewals and expand the competitiveness of private brand products centered on K-food in overseas businesses.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
