Lotte Group chairman returns to Lotte Shopping board

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Lotte Group chairman returns to Lotte Shopping board

Published: 24 Mar. 2025, 19:08

Audio report: written by reporters, read by AI

Lotte Shopping executives and shareholders attend the company's annual shareholder meeting at Lotte Retail Academy in Yeongdeungpo District, Seoul, on March 24. [LOTTE SHOPPING]

Lotte Group Chairman Shin Dong-bin has returned as a board director of Lotte Shopping, signaling a renewed focus on reviving the group’s struggling retail business.

His appointment was approved at Lotte Shopping’s annual general shareholder meeting in Yeongdeungpo District, western Seoul, on Monday, which went into effect the same day.

Shin, who had stepped back from Lotte Shopping’s board five years ago, now holds board positions at four key Lotte affiliates: Lotte Corporation, Lotte Chemical, Lotte Wellfood and Lotte Shopping. He stepped down from the board of Lotte Chilsung Beverage.

Lotte Group, which operates 296 affiliates — 94 of them in Korea — is divided into four main sectors: retail, chemicals, food and hotels. Among them, the retail and chemical businesses have faced mounting challenges. The retail unit has struggled to adapt to Korea’s rapidly shifting e-commerce landscape, while the chemical arm has been hit by global oversupply and weakened cost competitiveness, especially in the Chinese market.

The retail business has long been regarded as Lotte’s mainstay sector, making its recent struggles a particularly sensitive issue for the group. Shin once sat on the boards of up to nine affiliates but reduced his official roles after key shareholders like the National Pension Service raised concerns in 2015 about what they considered his excessive board memberships. A Lotte spokesperson said Shin’s decision to take on the role again reflects a commitment to direct oversight and responsible leadership.

Lotte Shopping has faced steep declines in recent years. Revenue dropped from 16.2 trillion won ($11 billion) in 2020 to 14 trillion won in 2024. The number of domestic and overseas stores — including department stores, discount chains, supermarkets and Hi-Mart outlets — fell from 1,234 to 874 over the same period, a 29 percent decrease. The company’s stock price has also plummeted, falling from over 250,000 won per share in 2018 to 65,500 won as of Monday’s close. Over the past two years alone, shares have dropped more than 40 percent.

In February, minority shareholders sent a letter to Lotte Shopping’s board, citing poor stock performance, excessive debt-driven interest burdens and opaque corporate governance as key reasons for investor dissatisfaction.

Lotte Mall West Lake Hanoi [LOTTE SHOPPING]

In a 2023 New Year’s address, Shin urged executives to focus on long-term corporate value. At a meeting held in July 2022 in Busan, he pointed to market capitalization as one of the most objective measures of company value.

Despite its shrinking footprint, 2024 may have been the year of potential recovery for Lotte Shopping. The company’s operating profit margin rose from 1.3 percent in 2021 to 3.4 percent in 2024, while operating profit more than doubled from 207.6 billion won to 473.1 billion won over the same period.

Lotte is now betting on overseas markets, especially in Southeast Asia. The company aims to increase exports of high-margin private brand products to countries such as Vietnam, Indonesia, Singapore and the United States. It also plans to leverage the group’s combined retail capabilities by investing in large-scale shopping complexes.

Lotte Shopping currently operates 68 stores in Vietnam and Indonesia. In July 2023, it opened Lotte Mall West Lake Hanoi, a mixed-use complex near the Vietnamese capital, which is expected to generate more than 200 billion won in annual revenue. The company plans to build two or three additional complexes in Vietnam by 2028.

At the shareholder meeting, Lotte Vice Chairman Kim Sang-hyun, head of the retail division, said the company would establish a local subsidiary in Singapore to expand its overseas retail operations.

"We aim to replicate the success of Lotte Mall West Lake Hanoi by expanding large-scale retail developments abroad and boosting private brand product exports,” he said, referring to the company's white label goods.

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BY CHOI HYUN-JOO [[email protected]]