Annual Gross Sales Turn Positive for the First Time in 5 Years
First Operating Surplus in 4 Years
Lotte Hi-Mart succeeded in expanding its profitability last year despite the slump in the domestic home appliance market.
Lotte Hi-Mart announced on the 4th that its total annual gross sales for last year came to 2.8453 trillion won, up 0.8% from a year earlier. Although net sales decreased year-on-year to 2.3001 trillion won, annual operating profit reached 9.6 billion won, an increase of 7.9 billion won from the previous year. Excluding one-off factors such as VAT refunds and ordinary wage-related items, operating profit increased by 29.7 billion won compared with the previous year.
According to the National Data Office’s data on “Sales by Type of Business and Product Group,” sales of home appliances, classified as durable goods, fell 5.7% last year from a year earlier. Analysts say that, even as the overall domestic home appliance market contracted, Lotte Hi-Mart managed to defend its sales scale and improve operating profit, thereby making progress in stabilizing its profit structure.
In particular, total annual gross sales returned to growth (a “plus turn”) for the first time in five years, and on a basis excluding one-off factors, the company posted an operating surplus for the first time in four years.
One pillar of the profitability improvement was its service business. “Hi-Mart Safe Care,” which consists of appliance insurance, after-sales service (A/S), cleaning, and home interior services, saw the number of annual customer service uses increase by about 23% last year, while sales rose by about 39%.
The private brand (PB) business also continued its growth trend. Centered on “PLUX,” which was relaunched in April last year, the company introduced products that reflected customer inconvenience data; as a result, 33 out of 55 newly launched products ranked within the top three in sales in their respective categories. Among these, 22 products took the number-one sales position. Backed by this performance, annual PB sales last year increased by 8% compared with the previous year.
The offline store strategy also delivered results. Focusing on medium- and large-sized stores, Lotte Hi-Mart has been continuously renewing them into “experience-based stores.” A key feature is the introduction of new formats such as integrated consultation stores for home appliances and durable goods tailored to customers’ living spaces, and “MOTOPIA,” an experiential space that offers the full lineup of mobile products. Sales at the 22 stores that completed renewal last year grew 39% year-on-year.
The restructuring efforts also paid off in the e-commerce segment. The average monthly number of unique visitors last year increased by 40% from a year earlier, while sales rose 8%. Analysts say that differentiated content such as the PB brand “PLUX,” “Hi-Mart Safe Care,” and “Hi-Mart Subscription,” together with an online-offline integrated consultation (OMNI) strategy leveraging some 3,000 home appliance specialists nationwide, boosted both traffic and purchase conversion.
A Lotte Hi-Mart official said, “We will continue to further advance our four key strategies that span services, products, stores, and e-commerce,” adding, “This year, we plan to fully launch qualitative growth through improved profitability.”
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