Lotte Hi-Mart Reports 2Q Operating Profit of 2.8 Billion KRW, Down 64.4% YoY

Reduced Deficit in First Half... "Store Renovation Success"
Plan to Accelerate Online and Offline Structural Innovation in Second Half

Lotte Hi-Mart announced on the 25th that its operating profit for the second quarter of this year was 2.8 billion KRW, a 64.4% decrease compared to the same period last year (7.8 billion KRW). Sales dropped by 13.3% to 589.3 billion KRW, and net profit fell by 34.4% to 1.4 billion KRW.

On a half-year basis, sales amounted to 1.1044 trillion KRW, down 14.7% from the same period last year, but the operating loss narrowed by about 4.7 billion KRW to 13.3 billion KRW. Lotte Hi-Mart explained that the renovation of offline stores and investments in new store openings, which they had focused on, contributed to improving the deficit.

Lotte Hi-Mart headquarters building.
[Photo by Lotte Hi-Mart]

Since the second half of last year, Lotte Hi-Mart has been focusing on four major strategies: the 'Home All-in-One Solution Service,' store format innovation, renovation of private brand (PB), and e-commerce restructuring. In particular, the Home All-in-One Solution Service, which manages the entire lifecycle of home appliance customers including repair, cleaning, relocation installation, extended warranty, and interior services, achieved an encouraging result with sales increasing by 50% in the first half of this year compared to last year. In the second half, the company plans to advance this service into 'Hi-Mart Safety Care,' expanding into areas such as security, disaster prevention, and care services.

Additionally, by applying product and service innovation strategies, Lotte Hi-Mart increased sales at renovated stores by 6.5% in the first half. Newly opened stores in the first half recorded more than twice the average monthly sales compared to existing stores, showing smooth progress. The company expects synergy effects to become visible once the PB and e-commerce restructuring, scheduled to be unveiled in the second half, are completed.

To strengthen its profit structure, Lotte Hi-Mart recently reorganized its workforce. As of the 1st of this month, it ended the dispatch of promotional staff and conducted large-scale new hiring. The company introduced that by building a human infrastructure capable of selling all brands and services with professional consultation, it can accelerate the strengthening of the core competitiveness of home appliance retailers. Based on this human capability, the company plans to expand the number of handled brands more than fourfold compared to last year and complete a professional consultation system that manages all stages before and after purchase by the end of this year.

Nam Chang-hee, CEO of Lotte Hi-Mart, said, "We are driving fundamental changes to manage every stage of the customer experience with home appliances from start to finish," adding, "We will strengthen the core competitiveness of home appliance retailers to make Lotte Hi-Mart a place customers want to visit regardless of the economic situation."

Meanwhile, Lotte Hi-Mart held a 'CEO IR DAY' in a non-face-to-face video conference format at 4 p.m. on the same day for investors including major asset management companies and securities firms. At the event, CEO Nam explained the tentative results for the first half of this year and the progress of key strategies pursued since last year. He also introduced the key strategies to be focused on in the second half.