Voluntary Retirement Planned for Second Half of This Year
All Executives' Salaries Cut by 20%
Business Division Restructuring... Slimming Down from 3 Headquarters to 1
World Tower Branch Tower Building Store Size Reduced
Lotte Duty Free has entered an emergency management system that includes workforce restructuring, business division restructuring, and executive salary cuts. This decision comes as a result of consecutive adverse factors hitting the duty-free industry, including the aftermath of COVID-19, high exchange rates, and high inflation.
On the 25th, Kim Junam, CEO of Lotte Duty Free, announced through the company’s internal bulletin board a message to employees stating the launch of this emergency management system. Lotte Duty Free explained that this emergency management system embodies the will for sustainable leap and overcoming the crisis.
In the message released that day, CEO Kim said, "After enduring difficult times post-COVID with expectations for market recovery, growth has stopped and profitability has worsened due to high inflation, high exchange rates, and rapid changes in the external environment," adding, "As the CEO leading the company, I deeply feel the responsibility." He continued, "Through a proactive transition to an emergency management system, we aim to overcome the current crisis and lay the foundation for a new leap," announcing measures to improve management conditions.
First, a high-intensity restructuring effort will begin targeting business divisions. The plan is to increase investment efficiency through selection and concentration and to establish repositioning strategies for each branch. The goal is to enhance management efficiency. A 'slimming down' of the organization will also be carried out. The existing three-headquarters system will be converted into one headquarters, while three departments and eight teams will be reduced, aiming to build a swift decision-making process.
Cost reduction efforts will also be undertaken. Product costs and competitive expenses will be managed integrally, and selling and administrative expenses will be reduced. Through this, the goal is to stabilize the profit structure.
Executive responsibility management will be strengthened to clarify the responsibilities and authority of executives. To this end, all executives’ salaries will be cut by 20%, and the number of executives will be optimized according to the scale of the business.
Additionally, company-wide workforce restructuring is planned. This restructuring includes voluntary retirement, job transfers, and performance improvement training. Lotte Duty Free plans to conduct voluntary retirement in the second half of this year, with specific conditions such as the target, scale, and compensation under review. Through this workforce restructuring, Lotte Duty Free aims to maximize productivity.
CEO Kim stated, "I believe in Lotte Duty Free’s ability and resilience to overcome crises as a market-leading company built over the past 45 years," and urged, "If we swiftly innovate our management system and prepare for the future in the changed market, our status as a 100-year company will rise and our pride will shine even brighter."
Meanwhile, as the first step in declaring the emergency management system, Lotte Duty Free decided on the 19th to reduce the store area of the Tower Building at Jamsil World Tower branch. The Tower Building store at World Tower branch was expanded and opened in June 2017 with an area of 4,599㎡ due to an increase in Chinese tourists and visitors to Lotte World Tower. It sells local specialties and small and medium-sized enterprise products, accounting for about 35% of the total area of the World Tower branch. Lotte Duty Free plans to improve profitability through cost reduction while enhancing customer shopping convenience to restore the competitiveness of the World Tower branch.
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