Lotte Shopping to set up Singapore holding firm, eyes its IPO

Lotte Shopping Co., South Korea’s leading retail company, will transform its special purpose company (SPC) in Singapore into a holding firm to beef up its Southeast Asian operations and will pursue its IPO, said a Lotte official on Friday. 

"We'll establish Singapore Holdings within the year and look to list the company in the future," said the official, declining to be named. 

The SPC oversees Lotte's operations in Vietnam and Indonesia, its key overseas markets.

As a holding firm, it will be able to raise money on its own without depending on its South Korea-based parent group and use the dividend income from its units for their investments.

The move is in line with Lotte's overseas expansion plans beyond the saturated domestic market.

FRESH FOOD SALES ONLINE

At home, it will reinforce the fresh produce business, particularly online, in cooperation with Ocado Group, a British online supermarket and technology group, said Kim Sanghyun, chief executive of Lotte Shopping, during its annual investor relations day.

Lotte Mart, its hypermarket chain operator, will lead the fresh produce business by jointly sourcing food with the supermarket chain Lotte Super. 

By 2030, Lotte Shopping, also the parent of Lotte Department Store, targets 1.3 trillion won ($1 billion) in operating profit on sales of 20.3 trillion won, Kim told chief investment officers and analysts at major South Korean asset management and brokerage firms during the IR session.

In 2023, its operating profit climbed 32% on-year to 508.4 billion won, despite a 6% dip in sales to 14.6 trillion won.

Regarded as one of underperforming retail stocks, the company pledged on Friday to pay a minimum 3,500 won dividend per share annually. By doing so, it will return 35% of its net profit to shareholders, up from the current 30%.

RETAIL MEDIA NETWORK

Lotte Shopping will kick-start the retail media network (RMN) business that allows it to sell advertisement space on its websites or offline stores to third-party brands.

It picked the RMN as its new growth driver, benchmarking Amazon and Walmart, which have already been making profits from the RMN business.

Lotte will also apply AI technology to offer real-time price comparison and an automatic ordering system.

REVISED PROFIT TARGETS FOR 2026

Meanwhile, it lowered its profit and sales targets for 2026 amid the sluggish domestic demand and declining population.

Lotte Shopping now aims for 800 billion won in operating profit against sales of 15.2 trillion won in 2026 on a consolidated basis.

The new guidance is 20% and 11% lower, respectively, than its previous 2026 targets.

Write to Ji-Yoon Yang at yang@hankyung.com
 

Yeonhee Kim edited this article.