Lotte Shopping Q3 OP falls 15.8% amid weak grocery sales

(Lotte Shopping)

Lotte Shopping posted a 15.8 percent year-on-year decline in operating profit for the third quarter to 130.5 billion won ($91 million), as weak performance in its grocery businesses offset gains in department stores and overseas operations, the company said Friday.

Revenue fell 4.4 percent to 3.41 trillion won, while the company swung to a net loss of 48.7 billion won, mainly due to asset impairment costs related to the cancellation of its Ulsan Station transfer center project.

The department store division remained a bright spot, logging 734.3 billion won in revenue and 79.6 billion won in operating profit, up 0.7 percent and 9 percent, respectively. It was the third consecutive quarter of profit growth. Lotte attributed the improvement to strong performance at flagship stores such as its main and Jamsil branches, as well as a 39 percent surge in foreign customer sales during the quarter.

In contrast, the grocery segment — encompassing Lotte Mart and Lotte Super — saw revenue tumble 8.8 percent to 1.3 trillion won, with operating profit plunging 85.1 percent to 7.1 billion won. The company cited weaker Chuseok holiday timing and the exclusion of grocery stores from the government’s consumption coupon program as key factors.

Overseas business continued to expand, with revenue inching up 0.4 percent to 374.4 billion won and operating profit soaring 69.7 percent to 12.9 billion won, marking the fifth straight quarter of growth. Lotte said its Lotte Mall West Lake Hanoi achieved record quarterly profit, while sales at the remodeled Bali hybrid store also grew significantly.

E-commerce subsidiary Lotte ON reported a 16 percent decline in revenue to 22.6 billion won, but its operating loss narrowed by more than half to 9.6 billion won, marking six consecutive quarters of reduced losses. The home shopping unit’s revenue and operating profit grew 1.6 percent and 4.8 percent, respectively, on the back of a rebalanced product portfolio.

Meanwhile, Hi-Mart saw a significant recovery in profitability once last year’s one-off factors were excluded, and Lotte Cultureworks turned a quarterly profit of 8.2 billion won, supported by stronger performance in specialty theaters and overseas operations.

Looking ahead to the fourth quarter, Lotte Shopping plans to boost earnings during the holiday season through new openings and product renewals. The company recently launched its K-fashion zone Kinetic Ground at the Jamsil branch and plans to reopen major stores in Seoul and Incheon. Starting Nov. 20, it will also host the Lotte Town Christmas Market in Jamsil.

The grocery unit aims to strengthen competitiveness in fresh food and private-label products, while focusing investment on its e-grocery business set to launch next year. Overseas supermarkets will further pivot toward K-food specialty formats to enhance profitability and growth potential.