Lotte Himart(071840) said on the 4th that it posted 900 million won in operating profit in the second quarter this year. That was a sharp drop of 91.4% (9.6 billion won) from the same period last year (10.5 billion won). Sales (based on net sales) fell 0.5% to 591.1 billion won. For the first half, it recorded an operating loss of 13.9 billion won. Compared with an operating loss of 600 million won in the first half of last year, the deficit widened significantly.
Profitability deteriorated because the sales share of large appliances and home and kitchen appliances, which have higher margins, decreased. Large appliance sales fell 12.5% in the first quarter and declined 1.4% in the second quarter, while home and kitchen appliances dropped 7.7%. In contrast, IT and mobile, which have relatively lower margins, rose 13.7%, changing the sales mix.
However, the sales trend improved. Total sales based on customer payment amounted to 733.9 billion won in the second quarter, up 0.7%, escaping the first quarter's contraction (-4.6%). By month, it went from -6.2% in April and -0.8% in May to an 8.3% increase in June.
External factors also appear to have played a role in the rebound in June. Samsung Electronics(005930) ran the "With the people, Samsung Electronics Thanks Festival" for four weeks from June 8 to July 5, returning 20% of the purchase amount in digital Onnuri gift certificates to customers who bought its home appliance and mobile products. The event included not only Samsung Stores but also big-box electronics retailers such as Lotte Himart and Etland, as well as Samsung Electronics outlets in hypermarkets and department stores. With an effective 20% discount, pent-up demand for appliance replacement concentrated in June.
Lotte Himart is focusing on a strategy of increasing customer visits with product categories that have short purchase cycles and then connecting them to purchases of large appliances with better margins. Sales of the "Safe Care" service, which bundles installation, repair, and cleaning of appliances, rose 44% to 37.3 billion won in the first half, and the share of customers who bought appliances together with services climbed from 15% in 2023 to 52.5% in the first half this year. Sales of the private brand (PB) "Flux" increased 20% to 76.4 billion won. The number of stores that buy used mobile phones increased from 47 at the end of June to 89 in July, and the rate at which buyback customers went on to purchase new products rose from 5% in March to 16% in July.
The company said it will expand customer touchpoints through IT and mobile to increase linked purchases of large appliances and pursue improvement in second-half operating profit by enhancing store operation efficiency using artificial intelligence (AI).