Korea’s Lotte Shopping aims to double profit, seek new biz

Lotte Shopping Co., South Korea’s retail giant, aims to double its profit in three years by expanding its Southeast Asian operations and cementing its leadership at home, while it seeks out new businesses with information technology for future growth.

Lotte Shopping said on Tuesday it targets an operating profit of 1 trillion won ($753.3 million) by 2026 based on sales of 17 trillion won. The operator of South Korea’s top department store chain Lotte Department Store expects profit to rise 30.8% to 505 billion won in 2023 from the previous year, although revenue is likely to dip 5.8% to 14.6 trillion won.

“We aim to become customers’ first shopping destination from next year based on the core management philosophy of customer-centered value after focusing on improving profitability and efficiency this year,” said Lotte Shopping Vice Chairman and co-CEO Kim Sang-hyun told chief investment officers of the country’s major asset managers during its IR event.

The ambition lifted Lotte Shopping’s share price to a five-week high of 76,400 won. The stock ended up 3.8% at 75,800 won on Seoul’s main stock market where the main Kospi shed 0.6%.

EXPANSION IN SOUTHEAST ASIA, LEADERSHIP IN KOREA

Lotte Shopping plans to expand its overseas business, especially in Southeast Asian countries such as Vietnam and Indonesia.

The retail unit of South Korea’s sixth-largest conglomerate Lotte Group is scheduled to open Lotte Mall West Lake Hanoi, the largest shopping mall in Vietnam, on Sept. 22. The group also started a $900 million project to build a 60-story shopping mall building with offices and other retail space on 50,000 square meters of land in Ho Chi Minh City.

In South Korea, Lotte Shopping aims to cement its leadership in the department store sector by taking the throne in some key commercial areas. The company plans to renovate major department store branches while opening new stores in various areas such as Songdo, an international business district in the country.

The company is set to accelerate the merger of the group’s hypermarket and supermarket units to top the domestic grocery market and generate stable profits.

The integrated operation of Lotte Mart and Lotter Super has been cutting costs and improving product quality and price competitiveness since last year, Lotte Shopping said. The company plans to establish an integrated next-generation system in the mid to long term to further reduce IT and logistics expenses for better profitability.

RETAIL TECH COMPANY

Lotte Shopping unveiled another goal to become a company specializing in retail tech. It aims to find fresh profit sources through a new business with artificial intelligence technology linking the retail industry based on data on 42 million customers.

The retail behemoth targets an integrated media platform business, which provides personalized advertising solutions by converging data assets with adtech.

The company aims to set up a generative AI promotion team specializing in the retail industry to automate advertising production and consult with customers based on AI in stages.

Lotte Shopping plans to build six customer fulfillment centers (CFCs) for a sales target of 5 trillion won by 2030 across the country in partnership with Ocado Group, the British online supermarket and technology group.

The South Korean company is set to start the construction of its first CFC in Busan, South Korea’s second-largest city, around the end of this year with plans to open it in 2025.

Write to Young Chan Song at 0full@hankyung.com
 

Jongwoo Cheon edited this article.