Lotte Hi-Mart (071840.KS) posted an operating loss in the first quarter, reflecting a contraction in the offline home appliance retail business amid declining moving demand. The company plans to create new demand by launching a used appliance business and improving dedicated stores for its private brand (PB) to overcome the challenging market environment.
Lotte Hi-Mart reported gross sales of 636.8 billion won, net sales of 496.9 billion won ($367 million), and an operating loss of 14.8 billion won in the first quarter, the company said Wednesday. Net sales fell 6.1% from the first quarter of last year, while operating profit declined by 3.7 billion won.
Home appliance sales typically rise when moving demand is strong. Lotte Hi-Mart said the unfavorable environment, including a decrease in residential relocations due to the real estate market slowdown, had a significant impact. In particular, according to the Korea Real Estate Board and the Ministry of Land, Infrastructure and Transport (MOLIT), moving demand in the first quarter of this year was forecast to decline sharply compared with the same period last year.
To overcome this environment, Lotte Hi-Mart plans to create new demand through strategic partnerships with leading companies in moving, cleaning, and home space installation services.
In terms of business operations, the company will strengthen its used appliance and care services. Through "Hi-Mart Certified Used Reuse," it will build a system that takes responsibility for appliances previously used by customers. The new business involves purchasing used appliances from customers, reselling them after inspection and refurbishment, and providing repair warranties.
The company will also open dedicated stores for its private brand PLUX around July. Hi-Mart plans to nurture the PLUX brand through three-to-five-year free warranties, cash compensation for large appliance replacements, and additional discounts.
