Lotte’s intra-group merger, business integration fare well

Lotte Mart and Lotte Super are leading Lotte Group’s efforts to streamline the overlapping businesses of its units. Their second-quarter results demonstrated the synergy effects such efforts generated.

In the second quarter of this year, Lotte Super turned to the black. Its operating profit came in at 5 billion won ($3.7 million), versus a 6 billion loss a year earlier, while its sales dipped 2.2% to 325 billion won.

“Although sales decreased slightly due to depressed consumer sentiment, we significantly improved profitability through cost reductions thanks to joint product sourcing with Lotte Mart since the end of last year,” said a Lotte Super official.

Since Kang SungHyun took the helm of both Lotte Mart and Lotte Super as chief executive at the end of last year, the two supermarket chains have shared grocery product codes and integrated tasks such as product ordering and management, as well as data analysis.

Lotte Mart more than halved its shortfall to 3 billion won in the April-June quarter, versus the previous year’s loss of 7 billion won.

Lotte Wellfood Co. also performed well in the second quarter. It was established in July 2022 after Lotte Confectionery Co. absorbed Lotte Food Co.

The combined entity posted a 7.8% rise on-year to 48.6 billion won in operating profit.

During a second-quarter conference call, Lotte Wellfood emphasized its post-merger integration efforts.

In the short term, it will integrate the ice cream-producing divisions of both Lotte Confectionery and Lotte Food; optimize the number of items it handles; and increase the joint procurement of foodstuffs.

Over the medium to long term, it will combine the two companies’ plants for meat processing and home meal replacements.

DEPARTMENT STORES

However, regarding joint marketing efforts that could involve Lotte Department Store, Lotte Group Chairman Shin Dong-bin has drawn a clear line.

“Department stores and marts are completely different businesses,” Shin was quoted as saying by the Lotte official. “It will not work if you do different businesses together.”

Lotte Group's assets stood at 129.7 trillion won ($97 billion) as of the end of 2022.


Write to Hun-Hyoung Han at hhh@hankyung.com
 

Yeonhee Kim edited this article.