Record-High Department Store Sales... Lotte Shopping's Q2 Operating Profit Jumps 121%

Increase in Demand from Foreign Shoppers and Fashion Boosts Domestic Department Store Operating Profit by 78%

Overseas Department Store Operating Profit Surges 310%, Led by Growth in Hanoi

Home Shopping Operating Profit Jumps 63%, Driven by High-Margin Products and Cost Efficiency

Lotte Shopping's operating profit in the second quarter of this year surged by 121% compared to the same period last year. This remarkable growth was fueled by a surge in foreign tourists and robust sales of fashion goods, resulting in a record-high second-quarter revenue for its department store business, while profitability also improved at major subsidiaries such as home shopping.

On August 7, Lotte Shopping announced that, on a consolidated basis, it posted sales of KRW 3.485 trillion in the second quarter of this year, up 4% from the same period a year ago. Operating profit jumped by 121.2% to KRW 89.9 billion. Although revenue growth was only single-digit, operating profit more than doubled. Net profit for the period turned positive, reaching KRW 14.6 billion, a turnaround from a net loss of KRW 10.3 billion in the second quarter of last year.

Foreign customers are shopping at the Sports Leisure Hall on the 7th floor of the Lotte Department Store Main Branch located in Sogong-dong, Jung-gu, Seoul. Provided by Lotte Department Store.

Department Stores Attracting Foreign Shoppers, Home Shopping Also Improves Profitability

The driver of this performance improvement was the department store division. Second-quarter sales in the department store business reached KRW 891.2 billion, up 9.2% on-year and hitting a new record for second-quarter revenue. Operating profit in this segment increased by 84% to KRW 119.7 billion. The profit generated by the department store alone surpassed Lotte Shopping’s total consolidated operating profit (KRW 89.9 billion). Losses from certain divisions—including hypermarkets, supermarkets, e-commerce, and Cultureworks—were offset by department store profits.

Domestic department store sales grew by 8.8% to KRW 855.6 billion, with operating profit soaring by 77.6% to KRW 112.3 billion. The number of visitors rose, especially at major locations such as the main and Jamsil branches, and increased spending by foreign tourists helped boost results. Balanced growth in sales across all categories, centered on fashion, also played a role.

Growth was even more pronounced at overseas department stores. Second-quarter overseas department store revenue climbed by 20.6% to KRW 35.6 billion, and operating profit surged by 309.7% to KRW 7.4 billion. Lotte Mall West Lake Hanoi set a new record for quarterly operating profit for six consecutive quarters, reaching KRW 5 billion in the second quarter. On a localized gross turnover basis, sales in Vietnam increased by 26%, and by 5% in Indonesia.

The home shopping business also contributed to profitability improvements. Lotte Home Shopping’s sales grew by 3.3% to KRW 238.6 billion in the second quarter, while operating profit increased by 62.7% to KRW 19.9 billion. This was driven by a higher share of high-margin items such as health foods and beauty products, and by reductions in selling and administrative expenses.

However, the performance of other segments was mixed. The hypermarket business posted sales of KRW 1.3295 trillion, up 2.6%, but recorded an operating loss of KRW 37.8 billion. Although costs associated with early retirement were incurred, the reduction in domestic losses helped narrow the deficit year-on-year. E-commerce revenue declined by 1.5% to KRW 26.2 billion, due to adjustments in the business portfolio. The operating loss in this segment was KRW 7.4 billion, reduced by KRW 1 billion from the previous year, thanks to improved profitability in key categories such as fashion and beauty, as well as higher advertising revenue.

Lotte Himart reported sales of KRW 591.1 billion with operating profit of KRW 1 billion, a 90.7% decrease from the previous year, largely reflecting the base effect of last year's value-added tax refund. Lotte Cultureworks saw its revenue grow by 15.5% to KRW 106.1 billion due to a boost in domestic box office performance and higher average ticket and concession sales. However, a one-time loss in the content business led to an operating loss of KRW 13.7 billion.

Strengthening "Townization" Strategy in Second Half, Improving Unprofitable Businesses

Thanks to strong performance in the second quarter, first-half results improved significantly as well. Cumulative sales for the first half of the year reached KRW 7.0666 trillion, up 3.8% from the same period last year. Operating profit surged by 81.5% to KRW 342.8 billion. Net profit for the period soared more than twenty-fold to KRW 158.5 billion from KRW 7.8 billion a year earlier.

In particular, the department store division’s operating profit for the first half came to KRW 310.9 billion, up 59.4% year-on-year—accounting for about 91% of the company’s consolidated operating profit. Operating profit from domestic department stores grew by 54.8% to KRW 295.9 billion, while that from overseas stores jumped 287.8% to KRW 15 billion.

Lotte Shopping plans to maintain the growth momentum of its department store business in the second half of the year while improving the profitability of unprofitable divisions. The department store segment will reinforce its "townization" strategy—integrating surrounding commercial areas and stores as unified hubs, primarily around the main and Jamsil locations. The company will also carry out spatial innovation in Myeongdong’s Lotte Town and develop the Incheon branch as its third Lotte Town.

The hypermarket division will strengthen competitiveness in fresh food and private label (PB) products, as well as expand its business in Southeast Asia, including Vietnam and Indonesia. In the online segment, the "Zeta Smart Center Busan" will launch to offer differentiated grocery shopping experiences and round-the-clock delivery services—morning, daytime, and night—for customers in Busan and the Yeongnam region. The e-commerce business will be reorganized around fashion and beauty, with concentration on "L.TOWN," the Lotte online gateway platform for its affiliates.

Jaecheol Lim, Chief Financial Officer of Lotte Shopping, stated, "Robust performance by our domestic and overseas department store businesses, together with company-wide efforts to improve profitability, helped us rebound in both the second quarter and the first half. Going forward, we will further enhance the core competitiveness of our key businesses and pursue sustainable organizational improvement to maintain stable growth."

This content was produced with the assistance of AI translation services.