Social distancing pushes Lotte Shopping into the red
Lotte Shopping announced a net loss of 43.33 billion won ($35.3 million) in the first quarter, down sharply from a 109 billion won net profit during the same period last year.
The retail giant's operating profit in the first quarter dipped 74.6 percent to 52.1 billion won, following depressed sales as the coronavirus pandemic has eroded consumer spending. Lotte Shopping's sales inched down 8.3 percent in the first quarter to 4.08 trillion won.
The company's performance was announced two days after Shinsegae blamed the same dire business environment on its reported 97 percent drop in operating profit.
The company declined to provide its net earnings for its subsidiaries.
Sales at department stores were particularly hard-hit. Lotte Department Store sales slid 21.5 percent on year to 606.3 billion won, while operating profit nosedived 82.1 percent to 28.5 billion won. Many people have avoided visiting crowded locations like department stores, Lotte Shopping said.
Sales at Lotte Hi-Mart, an electronics goods retailer, fell 10.8 percent on year to 925.3 billion won. Its operating profit plummeted 19.6 percent on year to 19.5 billion won.
Lotte Shopping, however, said it expects its performance to improve as sales of television, computers and laptops rise as more people seek modes of communication that preclude person-to-person contact.
Sales at Lotte Super inched up 3.6 percent on year to 491.3 billion won, but it posted an operating loss of 6.3 billion won.
Lotte Cultureworks, which operates Lotte Entertainment and Lotte Cinema, reported a 49 percent dip in sales to 102.5 billion won. It reported a 34.4 billion won operating loss as people also avoided cinemas.
The company's home shopping unit, however, saw increases in both sales and operating profit given the recent surge in popularity of health care products. Its operating profit jumped 10.6 percent to 36.7 billion won on 269 billion won sales, which were up 16 percent compared to the same period last year.
“Retailers in Korea suffered major difficulties in the first quarter with the spread of coronavirus that led people to avoid crowded locations and decreased their spending,” a spokesperson for Lotte Shopping said in a statement. “Lotte Shopping plans to continuously strengthen its e-commerce working environment via Lotte Shoppings’ integrated online platform Lotte On.”
BY JIN MIN-JI [email@example.com]