Hi-Mart "Achieving 2.8 Trillion KRW Sales and Over 100 Billion KRW Operating Profit Within 5 Years"

Value-Up Plan Disclosure
Q3 Operating Profit Decreases 13.8% Year-on-Year

Lotte Hi-Mart posted slightly lower results in the third quarter of this year compared to last year due to the impact of the economic downturn and other factors. Through a value-up disclosure, the company also announced its goal to exceed KRW 2.8 trillion in sales and KRW 100 billion in operating profit within five years.

Lotte Hi-Mart disclosed on the 1st that its operating profit for the third quarter of this year was tentatively estimated at KRW 31.23 billion, down 13.8% from the same period last year. During the same period, sales decreased by 5.5% to KRW 685.882 billion, and net profit fell by 1.1% to KRW 26.752 billion.

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

However, Lotte Hi-Mart explained that excluding one-time income such as VAT refunds and one-time expenses caused by the T-mep (Timon·Wemakeprice) incident, the results were similar to the previous year. Furthermore, these figures were 2.7% higher than the market consensus (forecast) sales of KRW 667.8 billion and 38.1% higher than the operating profit forecast of KRW 22.6 billion.

A Lotte Hi-Mart official stated, "Despite the continued negative factors such as the economic downturn and real estate slump, the decline in sales was significantly reduced compared to the first half," adding, "Operating profit turned positive for two consecutive quarters and recorded a cumulative profit for the year."

In addition, Lotte Hi-Mart announced its value-up plan on the same day and held a 'CEO Value-Up Conference' in the form of a non-face-to-face video meeting. Nam Chang-hee, CEO of Lotte Hi-Mart, announced the financial target achievement plan and shareholder return plan through the conference, covering up to 2029.

Lotte Hi-Mart stated that it aims to achieve sales of more than KRW 2.8 trillion and operating profit of more than KRW 100 billion by 2029. It also added that it plans to introduce a dividend payout ratio of 30% and a 'pre-dividend amount - post-dividend record date confirmation structure.' Through this, the company intends to enhance dividend predictability and shareholder value by helping investors make decisions.

The company also presented its core business strategies. The themes of the core business strategies are ▲ store format innovation and customer experience enhancement ▲ Hi-Mart Safe Care ▲ strengthening private brands (PB) and overseas brands ▲ and e-commerce integrating online and offline experiences.

Since 2023, Lotte Hi-Mart has been renewing stores considering customer and commercial district characteristics. In addition, it has been strengthening customer service by installing dedicated service consultation centers in renewed stores. This year, store renewals specialized in interior design and hobbies are underway, considering the commercial district.

Customer lifecycle customized care services are also being strengthened. The aim is to expand customer touchpoints and firmly continue the customer lock-in effect. Starting this year, the company is promoting the addition of various content-centered services for customer safety, such as elderly care, disaster prevention, crime prevention, and pet care, to existing services.

The company is expanding differentiated PB and overseas brand sourcing to increase customers' choices. Lotte Hi-Mart achieved results such as ranking first in category sales by launching cost-effective products like the 245ℓ general refrigerator and station vacuum cleaner this year. Currently, the PB is undergoing rebranding, which is expected to be completed within this year, with a new PB to be unveiled next year. The overseas brand lineup will be strengthened with premium and cost-effective brands.

In the e-commerce sector, the company is renewing its services focusing on resolving customer inconveniences while strengthening the connection between online and offline. Differentiation efforts in e-commerce, centered on new content targeting younger customers and offline-linked products such as unopened and display items, are scheduled to be completed this year.

Nam Chang-hee, CEO of Lotte Hi-Mart, said, "We are promoting the organic linkage of the four core strategies based on strengthening integrated online and offline human capabilities," adding, "Through fundamental structural improvements and successful implementation of the four core strategies, we will establish ourselves as 'the place where home appliances become easy, Lotte Hi-Mart,' as our slogan, and realize mid- to long-term performance improvement goals and enhancement of shareholder value."