[Market Focus] Performance Rebound Accelerates... Lotte Himart Up 4.23%

Lotte Himart's stock price is on the rise as the company is expected to see a full-fledged rebound in performance, driven by the results of its structural innovation.

As of 10:23 a.m. on August 5, Lotte Himart was trading at 9,120 won, up 370 won (4.23%) from the previous day.

In the second quarter of this year, Lotte Himart recorded sales of 594.2 billion won and operating profit of 10.5 billion won. These figures represent increases of 0.8% and 277.2%, respectively, compared to the same period last year.

KB Securities evaluated Lotte Himart on this day as "the largest home appliance specialty retailer in Korea, where a turnaround in performance has begun." As the background for this turnaround, KB Securities cited ▲the launch of new stores ▲the effects of direct employment ▲an increase in high-frequency and high-margin SKUs ▲and the launch of Himart's subscription service.

Kim Hyungyeom, a researcher at KB Securities, said, "Lotte Himart's turnaround in performance has started. Over the past two years, the company has focused on structural innovation, which has strengthened workforce expertise through direct employment, and it has expanded customer touchpoints by introducing differentiated stores that reflect the characteristics of local commercial districts." He added, "Through store closures and renewals, the company's fundamentals are improving, and the number of stores, which had been declining last year, has started to increase from the first quarter of this year as new store openings are accelerating."

He continued, "In addition, the company has differentiated itself from the previous single-brand-focused service by launching a subscription service that covers 11 brands, 21 categories, and approximately 800 products. With the recent shift in consumption patterns from 'ownership' to 'usage,' the expansion of customer experience-oriented stores is expected to create synergies, and now is the time to pay attention to sales growth and improved performance stability."

He also highlighted the benefits of the high-efficiency home appliance purchase rebate program. Kim noted, "This is a support program totaling 267.1 billion won, under which customers can receive a refund of 10% of the purchase price, up to a maximum of 300,000 won, when purchasing home appliances with the highest energy efficiency rating (Grade 1). At least 890,000 people are expected to benefit from this program, and it is anticipated to have a positive impact on sales growth."

The company's efforts to enhance shareholder value are also seen as a positive factor. Kim stated, "In November last year, Lotte Himart announced a plan to enhance corporate value. The company set key indicators as sales, operating profit, and dividend payout ratio, and presented performance targets for 2029 of at least 2.8 trillion won in sales, at least 100 billion won in operating profit, and a dividend payout ratio of 30%. Through this, expansion of shareholder return policies and enhancement of corporate value are expected."