Mini Appliances for 'Single-Person Households' Drive Performance... Lotte Hi-Mart Sales Rebound for First Time in Five Quarters

Net sales rose 0.3% year on year to KRW 654.5 billion
Care service sales rose 62% and mobile sales climbed 28%
Operating profit fell amid lower moving demand and weak seasonal appliance sales

Lotte Hi-Mart returned to sales growth in the third quarter of this year for the first time in five quarters, but operating profit fell by more than 70%. Sales edged up on strong performance in appliance care services and mobile sales, but lower demand from people moving and weak seasonal appliance sales prevented profits from rising as well.

Lotte Hi-Mart disclosed on November 4 that its net sales for the third quarter of this year rose 0.3% year on year to KRW 654.5 billion. This was the first increase in net sales in five quarters. Gross sales grew 0.7% to KRW 802.2 billion, marking a second consecutive quarter of growth. Operating profit fell 70.9% year on year to KRW 5.5 billion.

Lotte Hi-Mart headquarters building. Courtesy of Lotte Hi-Mart.

Growth was driven by appliance care services, information technology (IT) and mobile products, and private-brand (PB) products. The company said sales of its “Care Service,” which manages appliances from purchase through use and replacement, rose 62% year on year. Cumulative sales for the first three quarters of this year also climbed 50%, surpassing the full-year figure for last year. The number of customers who purchased both appliances and services exceeded 1 million.

IT and mobile sales rose 11%. Mobile sales in particular increased 28%, recording double-digit growth for three consecutive quarters so far this year. PB sales also rose 23%. Lotte Hi-Mart is pursuing a strategy of attracting customers with products and services that have short purchase cycles and high purchase frequency, then encouraging additional purchases of large appliances and other products.

However, this growth did not lead to improved profitability. Demand for appliance replacement weakened as fewer people moved, while seasonal appliance sales also faced a base effect following a late heat wave. Declining sales of large appliances and home and kitchen appliances weighed on profitability. Sales of home and kitchen appliances fell 4.1% year on year. Although the decline narrowed from 7.7% in the second quarter, sales continued to contract. According to the Ministry of Data and Statistics, the number of people who moved within South Korea in the third quarter fell 10.2% year on year. The Bank of Korea’s preliminary third-quarter GDP estimate also showed that private consumption turned negative for the first time in three years and nine months, as spending on goods such as home appliances contracted.

Lotte Hi-Mart plans to improve its performance by expanding care services and PB products, which are relatively profitable. “All-Care Appliance Repair,” launched early last month, surpassed 25,000 subscribers in just one month. A Lotte Hi-Mart official said, “We will connect service users with appliance purchases and expand key businesses, including mobile and online, to increase both sales and profitability.”

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