As the fourth-quarter business operations of domestic corporations enter the final stretch, Lotte Shopping is expected to fall short of its early-year targets of 14 trillion won in sales and 600 billion won in operating profit. The department store business held up by improving profitability, but declines in both sales and operating profit at the Mart and Super businesses were a drag. The e-commerce business, represented by Lotte ON, also remains in the red.
This year, Lotte Shopping signaled its intent to improve results as Shin Dong-bin, chairman of Lotte Group, returned as an inside director for the first time in five years. However, the company is struggling to strengthen core competitiveness amid a domestic consumption slump. Lotte Group is seeking a turnaround by replacing a large number of chief executives at Lotte Shopping affiliates through sweeping restructuring.
According to FnGuide, a financial information company, on the 23rd, Lotte Shopping's estimated results for this year are 13.8443 trillion won in sales and 556.4 billion won in operating profit. Compared with a year earlier, sales are down 1%, while operating profit is up 17.6%.
Earlier, at the 2024 earnings presentation held in Feb., Lotte Shopping set this year's targets at 14 trillion won in sales and 600 billion won in operating profit. Even after adding the yet-to-be-counted fourth-quarter results, both sales and operating profit are projected to miss the targets.
Through the third quarter, Lotte Shopping posted cumulative sales of 10.2165 trillion won and operating profit of 319.4 billion won. Year over year, sales fell 2.8% and operating profit decreased 2%. Most of the revenue was driven by department stores. In the first to third quarters, the domestic department store segment recorded sales of 2.2958 trillion won, down 1.2% from a year earlier, while operating profit rose 22.9% to 270.7 billion won. Sales performance improved mainly at large stores such as the Main Branch, Jamsil, Busan Main Branch and Incheon, helped by an increase in foreign tourist customers.
In contrast, the grocery segment, which operates Lotte Mart and Super, saw declines in both sales and operating profit. In the first to third quarters, the grocery segment's sales were 3.8812 trillion won, down 5.6% from a year earlier, and it swung to a loss with an operating loss of 28.3 billion won. The e-commerce business represented by Lotte ON also posted a cumulative loss of 26.6 billion won in the first to third quarters.
Chairman Shin has demonstrated a will to improve performance by taking responsibility for Lotte Shopping's management. After the regular shareholders meeting in Mar., he returned as an inside director for the first time in five years. He also assumed the role of co-CEO. Since returning, Shin has attended most Lotte Shopping board meetings in the first half, taking part in major decisions such as changes to the development plan for Seoul's western district, a new store opening for Lotte Mart Grand Grocery in Guri, the return and re-bidding of the business rights for Lotte Department Store Yeongdeungpo, the closure of Lotte Factory Outlet Gasan, and the sale of certain Lotte Department Store assets.
At the VCM (Value Creation Meeting, formerly the presidents' meeting) early this year, Chairman Shin also said, "To regain the market's trust quickly, we are implementing various measures such as sales of tangible assets and asset revaluations, but to fundamentally resolve the issue, we must enhance the business's intrinsic competitiveness to improve profitability."
With business results falling short of targets, Lotte Group is seeking a turnaround by pursuing sweeping personnel changes in the 2026 regular appointments released last month. To strengthen accountability-centered management at each affiliate, it abolished the business oversight structure that had been in place for nine years, and as a result, Vice Chairman Kim Sang-hyun, head of the Lotte retail group overseeing the distribution sector, stepped down.
Along with this, Lotte Shopping replaced multiple CEOs across the department store, Mart and Super, and e-commerce divisions. Jeong Hyeon-seok, head of the outlet business division at Lotte Department Store, was appointed CEO of Lotte Department Store, and Cha Woo-cheol, CEO of Lotte GRS, was appointed CEO of Lotte Mart and Super. For the e-commerce division, Chu Dae-sik, head of planning and management at Lotte e-Commerce (executive director), was promoted and appointed CEO.
Lotte Shopping is pinning hopes on the Zetta Smart Center Busan, an advanced automated logistics center slated for completion in the first half of next year. The center applies the smart platform (OSP) of the U.K. global Retailtech company Ocado. Lotte Shopping plans to improve pain points in online grocery shopping such as product spoilage, out-of-stocks, omissions and misdeliveries, and to enhance delivery quality and customer satisfaction to improve profitability in the online grocery business.
Park Jong-ryeol, an analyst at Heungkuk Securities, said, "Next year, gradual improvement in domestic consumer expenditure is possible on the back of rising real wages, more foreign visitors to Korea and improved consumer sentiment," adding, "While the department store segment, a high-end consumer goods area, will continue to drive profitability next year, a rebound in Mart and Super performance is also possible."