Lotte Shopping (023530.KS) posted an earnings surprise in the first quarter, with operating profit jumping 70.6% from a year earlier, as its department store unit led growth with stronger spending from both domestic and foreign customers, while marts and home shopping also boosted profitability.
Lotte Shopping said Tuesday that first-quarter consolidated operating profit reached 252.9 billion won, up 70.6% from the same period last year. The result exceeded the market consensus of 207.5 billion won by about 22%. Revenue rose 3.6% to 3.58 trillion won during the same period, while net profit surged 694% to 143.9 billion won.
The department store division led the overall performance with record first-quarter revenue and operating profit. Department store revenue rose 8.2% year-on-year to 872.3 billion won, while operating profit climbed 47.1% to 191.2 billion won. Notably, sales to foreign customers jumped 92%, nearly doubling from a year earlier.
According to Lotte Shopping, 53 out of 57 outlets across the country — including 30 department stores, 10 shopping malls and 17 outlet stores — recorded higher sales than a year earlier in the first quarter. "The fact that sales grew at most stores means the growth was supported not only by foreign demand but also by overall domestic consumption," a Lotte Shopping official said. "Amid the trend of consumption polarization, strong sales of high-margin fashion products pushed same-store sales up 13%."
The mart division also improved profitability. First-quarter mart revenue rose 2.6% to 1.53 trillion won, while operating profit grew 20.2% to 33.8 billion won. The home shopping unit more than doubled its operating profit to 26.4 billion won from 12.1 billion won a year earlier, helped by a higher share of high-margin products such as health functional foods. However, Lotte Super's operating profit fell 30.7% to just 2.2 billion won, while e-commerce and Lotte Hi-Mart continued to post operating losses.
Some analysts attribute Lotte Shopping's overall strong performance to the wealth effect from the stock market rally. "Behind the resilience of domestic consumer sentiment is the impact of the stock market boom," an industry official said. "That is also why mart earnings are not declining." Given these factors, Lotte Shopping's earnings are expected to maintain their strong momentum for the time being, despite variables such as the Iran war and high oil prices.
The Vietnamese market is also expected to serve as a new growth engine for Lotte Shopping. In the first quarter, Lotte Mall West Lake Hanoi posted its highest-ever quarterly operating profit of 4.9 billion won. Supported by this, the department store division's revenue growth rate in Vietnam reached 28%. The mart division also saw revenue in Vietnam increase 18%, generating 485 billion won in overseas revenue alone and 25 billion won in operating profit.
"We were able to achieve remarkable results based on the solid performance of the department store business and the improved profitability of our subsidiaries," said Lim Jae-cheol, head of finance at Lotte Shopping. "We will continue to strengthen the fundamental competitiveness of our domestic business and solidify sustainable growth drivers through overseas expansion."
