Lotte Shopping had the lowest performance since 2000 last year. Although operating profits in business divisions such as electronics specialty stores, discount stores, and supermarkets improved year-on-year, the department store division’s operating profit fell sharply and overall earnings deteriorated significantly. The last year Lotte Shopping recorded an operating profit of 300 billion won in 2000, 20 years ago.
On the 8th, Lotte Shopping announced that it recorded 16.76 trillion won in sales and 346 billion won in operating profit last year. Sales decreased 8.8% year-on-year, and operating profit decreased 19.1%.
By division, the department store division’s earnings deteriorated markedly. Lotte Shopping posted an operating profit of 328 billion won in the department store division last year, which is a whopping 36.9% decrease from 519 billion won last year. In fact, a decline in the department store division, which supports most of the operating profit, led to a decrease in overall operating profit.
The department store business is analyzed to have been affected by the consumption downturn caused by Corona 19. As the pandemic lasted for a long time, the number of customers visiting department stores decreased significantly compared to the previous year. Sales amounted to 2,655 trillion won, down 15.2% from 3,13 trillion won last year. In addition, the increasingly fierce offline market competition and the emergence of online shopping malls seem to have had an impact.
The discount store business turned to a surplus from a loss of 25 billion won last year with a profit of 19 billion won. This is the result of efforts to reduce SG&A expenses along with an increase in online sales. Specifically, online sales increased by 39.3% and SG&A expenses decreased by 17.1%.
Electronics specialty stores rather benefited from Corona 19. This is due to the increased demand for replacement of premium home appliances due to increased time at home. Sales amounted to 4,520 billion won, an increase of only 0.6% year-on-year, but operating profit was 161.1 billion won, an increase of 46.6% from the previous year.
In addition, the home shopping division’s operating profit increased 4.3% to 125 billion won, and the super division’s operating loss decreased from 104.0 billion won a year to 20 billion won.
Lotte Shopping’s operating profit of 346 billion won last year is the lowest since 2000. In the past 20 years, Lotte Shopping has never made an operating profit of less than 400 billion won.
As a result of looking at all the business reports for the past 20 years, it was in 2000 that Lotte Shopping last recorded an operating profit of around 300 billion won. Lotte Shopping has actually improved its earnings every year since it achieved an operating profit of 321 billion won in 2000. From 2008 to 2015, it has earned more than 1 trillion won in profits.
Lotte Group Chairman Shin Dong-bin, conscious of the crisis, declared a major restructuring last year. Lotte Shopping has already reduced the number of stores by more than 70 last year, regardless of the type of hypermarkets, specialty stores, and department stores. Also, on January 1, it was decided to integrate the Robs business, which had suffered poor performance, into the existing mart business.