[Click eStock] "Lotte Shopping, Disappointing Overseas Business Sales Contribution... Target Price Down"

Target Price Lowered from 90,000 Won to 75,000 Won

On the 10th, Korea Investment & Securities downgraded its target price for Lotte Shopping from 90,000 won to 75,000 won, stating that sluggish domestic consumption and a weak distribution environment, along with low sales contribution from overseas businesses, would weigh on the stock price. The investment rating was maintained at 'Buy.'

Lotte Shopping reported consolidated sales of 3.4771 trillion won in the fourth quarter of last year, down 4.3% year-on-year, and operating profit of 147.2 billion won, a decrease of 27.3%. Myungjoo Kim, a researcher at Korea Investment & Securities, explained, "Excluding one-time labor costs (53.2 billion won), operating profit was in line with market expectations," adding, "domestic department stores recorded a somewhat weak operating profit of 201.7 billion won, down 11.5%."

Along with its earnings announcement, Lotte Shopping presented a 2025 guidance of 14 trillion won in sales and 600 billion won in operating profit. Researcher Kim forecasted that Lotte Shopping would likely achieve these targets smoothly but pointed out the slow recovery of domestic consumption and the resulting weak distribution supply-demand environment, expecting that it would take time for the stock price to recover.

Kim said, "It is positive that the company's new businesses, such as overseas department stores and discount stores, are performing better than market expectations," and evaluated, "In particular, the continuous reduction of operating losses at Westlake Hanoi and the operating profits recorded in October and November are very encouraging." However, he noted as a limitation that overseas business sales accounted for only 12% of total sales in the fourth quarter of last year, indicating a very low contribution."