Lotte Announces Major Shift in Management Policy... Tightens Belt for Efficiency

Management Policy Delivered at This Year's First-Half Executive Meeting
"Let Go of Past Methods of Success"
Calls for Strengthening the Fundamental Competitiveness of Core Businesses

Lotte Group has announced a major shift in its management policy, declaring a transition to a "quality growth-oriented" approach. The group plans to strengthen its fundamentals through rigorous austerity measures and shift its management focus toward efficient investment.

According to industry sources on January 16, Shin Dongbin, Chairman of Lotte Group, presented this vision to executives at the 2026 first-half Value Creation Meeting (VCM, formerly the Presidents’ Meeting) held the previous day at Lotte World Tower in Songpa-gu, Seoul. He emphasized, "We must manage our key indicators with a focus on profitability, enhance corporate value, and lay the foundation for sustainable growth."

Shin Dongbin, Chairman of Lotte Group. Photo by Lotte

Chairman Shin also outlined essential management policies that must be implemented to address the key issues discussed at the meeting: ▲ shifting to profitability-based management ▲ making swift and proactive decisions ▲ guarding against arrogance and focusing on the essence of the business. He urged the executives to move away from the traditional focus on top-line growth and instead reinforce internal stability by prioritizing profitability and efficient investment, using return on invested capital (ROIC)-which is calculated by dividing after-tax operating profit by average invested capital-as the guiding principle. This indicates that the group will evaluate both existing and new business projects based on their investment efficiency before deciding whether to proceed.

This message comes in response to a slowdown in growth, attributed to declining performance across the group’s main businesses. In the food sector, which includes Lotte Wellfood, Lotte Chilsung Beverage, and Lotte GRS, cumulative sales for the third quarter of last year reached 7.1861 trillion won, up 2.6% year-on-year, but operating profit fell by 8.8% to 355.6 billion won. The sector was hindered by sluggish domestic demand for alcoholic beverages and processed foods, as well as rising raw material costs. Lotte Shopping, which focuses on department stores and supermarkets, also saw a decline in cumulative results through the third quarter of last year due to weakened consumer sentiment in the domestic market. During this period, sales fell by 2.8% year-on-year to 10.2165 trillion won, and operating profit decreased by 2% to 319.4 billion won. Lotte Chemical, which had served as a cash cow for the group, also suffered from deteriorating market conditions, with cumulative sales through the third quarter of last year falling 8% year-on-year to 13.7731 trillion won. Although operating losses were reduced by about 25% to 509.6 billion won, the company still remained in the red. As a result, rumors of a liquidity crisis surrounding Lotte have recurred year after year.

In response, at the end of last year, Lotte undertook a major personnel overhaul, with all vice chairmen stepping down and 20 out of 60 affiliate CEOs-one-third of the total-being replaced. The group also abolished the headquarter (HQ) system, which had grouped affiliates by industry sectors such as distribution, chemicals, food, and hotels, thereby strengthening its commitment to responsible management. Additionally, executives who had successfully turned around underperforming businesses were appointed as CEOs of major affiliates as part of this organizational restructuring.

For example, Cha Woochul, who turned Lotte GRS profitable within a year of taking office, was appointed to lead both Lotte Mart and Lotte Super. Jung Hyunseok, who made FRL Korea-the operator of Uniqlo and other brands-profitable, was selected as the youngest-ever CEO of Lotte Department Store. As a result, the group is expected to closely monitor the performance of Lotte Mart and Lotte Super’s online grocery business, which is being conducted in partnership with UK retail tech company Ocado in the first half of this year, and to reconsider the continuation of Time Villas, a future-oriented store concept promoted by Lotte Department Store.

Chairman Shin stressed, "Investments must be made based on clear principles and standards, and even for projects where investment is already underway, we must continuously review their viability and adjust details as necessary." He added, "We must guard against arrogance born from past successes, believing that we are different. We need to quickly pursue innovation to strengthen our fundamental competitiveness, moving beyond the methods that led to previous successes."

Meanwhile, the VCM is a biannual executive meeting held by Lotte Group to share company-wide strategies and mid- to long-term directions. About 80 attendees participated in the meeting, including Chairman Shin, his eldest son Shin Yooyeol-Head of Future Growth at Lotte Holdings and Co-CEO of Lotte Biologics-co-CEOs Noh Junhyung and Ko Jungwook of Lotte Holdings, and the heads of various affiliates.