Lotte Shopping Reports 70% Surge in Q1 Operating Profit Driven by Foreign Tourists

Lotte Shopping reported a significant increase in its first-quarter performance, driven by growth in its department store segment. The surge in spending by foreign tourists, particularly in Myeongdong, along with high-margin fashion sales, contributed to a more than 70% rise in operating profit. The company also noted improvements in its profitability efforts and strong performance in overseas markets, including Vietnam.
 
On May 11, Lotte Shopping announced that its consolidated operating profit for the first quarter reached 252.9 billion won, marking a 70.6% increase compared to the same period last year. Revenue rose by 3.6% to 3.5816 trillion won, while net profit skyrocketed by 694.1% to 143.9 billion won, exceeding market expectations.
 
The department store division was the standout performer, with first-quarter sales of 872.3 billion won and operating profit of 191.2 billion won, representing growth of 8.2% and 47.1%, respectively, from the previous year. Domestic sales from major stores, including the flagship store, Jamsil, and Busan, increased by 19%, while sales to foreign tourists surged by 92%, contributing to a 13% increase in same-store sales.
 
Notably, sales from the flagship store to foreign customers more than doubled, increasing by 103% year-on-year, and accounted for 23% of total sales, driving overall performance improvements. Additionally, strong sales of high-margin fashion products led to a 43.5% increase in operating profit compared to the same period last year.
 
The overseas department store segment also showed positive trends, with total sales rising across all locations, including a 28% increase in Vietnam and a 7% increase in Indonesia. The Lotte Mall Westlake Hanoi achieved a record operating profit of 4.9 billion won in the first quarter. Consequently, overseas sales reached 35.5 billion won, up 14.7% from the previous year, with operating profit soaring by 268.7% to 7.6 billion won.
 
Looking ahead to the second quarter, the department store division plans to continue attracting foreign customers by specializing in K-content-based product planning and marketing, particularly at the flagship and Jamsil locations.
 
The supermarket division, which operates Lotte Mart, reported first-quarter sales of 1.5256 trillion won, a 2.6% increase from the previous year, with operating profit rising by 20.2% to 33.8 billion won, reflecting a focus on profitability. Domestic supermarkets benefited from efficient promotions and a reduction in operating expenses, achieving a 30.9% increase in operating profit to 8.8 billion won compared to the same period last year.
 
The overseas business also performed well, particularly in Vietnam, with total sales reaching 485 billion won and operating profit of 25 billion won, representing increases of 3.4% and 16.8%, respectively, from the previous year. The Vietnamese market showed an impressive growth rate of 18%, driving overall improvements in overseas performance.
 
The supermarket division aims to enhance brand competitiveness and customer attraction through innovations in fresh food quality, strengthening private brand offerings, and regular promotions like 'Big Day.' In the online sector, the launch of the 'Zeta Smart Center Busan' utilizing Ocado's Smart Platform (OSP) aims to bolster competitiveness in the grocery market. The company also plans to continue expanding in the Vietnamese market with new store openings and renovations of existing locations.
 
Among its subsidiaries, Lotte Home Shopping reported a 2.1% increase in sales to 232.4 billion won, with operating profit rising by 118.6% to 26.4 billion won, driven by a portfolio focused on high-margin products like health and beauty items, and an expansion of content commerce through social media.
 
Culture Works, responsible for the film business, saw a 49.2% increase in cinema attendance due to the success of the film 'The King and the Clown,' which became the second-highest-grossing film in South Korea's history. This resulted in an operating profit of 7.9 billion won and a 44.4% increase in revenue to 124.6 billion won.
 
In contrast, the electronics retail division, Lotte Hi-Mart, faced challenges due to a downturn in the electronics market and a sluggish real estate sector, reporting an operating loss of 14.7 billion won in the first quarter, widening its losses compared to the previous year. The e-commerce division also reduced its losses by 2.7 billion won compared to the previous year, but still recorded an operating loss of 5.8 billion won in the first quarter.
 
Im Jae-cheol, head of Lotte Shopping's finance division, stated, "In the first quarter of this year, we achieved remarkable results based on the solid performance of our department stores and the profitability improvements of our subsidiaries. We will continue to strengthen the fundamental competitiveness of our domestic business and solidify sustainable growth through overseas expansion."