Lotte Himart stock rallies on strong Q3 outlook

Lotte Himart Co. shares are extending a rally as South Korea’ leading consumer electronics and household appliances retailer under Lotte Group is expected to deliver strong earnings for the third quarter thanks to its successful shift to online sales amid growing demand for Covid-19-induced contactless shopping.

On Monday, Lotte Himart shares gained 2.03 percent to close at 30,150 won ($25.68) in Seoul. It’s a sea change from late March when the stock nosedived to 11,050 won amid a coronavirus-triggered market rout. But it has extended solid gains since then to double the price over the past six months.

The sharp stock price growth comes in line with the company’s strong earnings. Lotte Himart is expected to post 41.8 billion won in operating profit for the third quarter ending September, up 25.2 percent from the same quarter last year, according to local financial market data provider FnGuide. For quarterly-revenue, the company is expected to post 1 trillion won, up 3.3 percent year-on-year.

[Photo provided by Lotte Himart Co.]

Sales of large home appliances, such as refrigerator, washer and dryer, are estimated to have grown 20 percent this year, thanks to growth in demand for consumer electrics from more time spent at home due to the pandemic, said Park Jong-dae, a researcher at Hana Financial Investment.

Lotte Himart also has been successful in attracting consumers, shopping home appliances through online stores to avoid risk of virus infections. The company has been upgrading its online stores since late 2015 and this has proved well at the time of the Covid-19 crisis, said the company. In the first half, the consumer electronics retailer earned 15.1 percent of its sales through online stores, up sharply from 2.2 percent in 2015.

While shoring up its online business, the company has been closing brick-and-mortar outlets to lower fixed costs. It has shut down 19 offline stores in the third quarter, with a plan to shutter five more by the end of this year. Such efforts have led to higher operating margin, reaching 6.2 percent in the second quarter versus 2.1 percent in the first quarter.

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