South Korea’s retail giant Lotte Shopping operating department stores, big-box stores and discount stores will go on unprecedented dieting, losing 30 percent of 700 domestic outlets after logging $1 billion in red in its bottom line for the final quarter of 2019 and facing even grimier prospects this year.
Lotte Shopping announced Thursday it will close money-losing 200 shops over the next three years in the first-ever sweeping streamlining in its corporate history of 41 years, underscoring the urgency in management amid intensifying competition from e-commerce rivals and subdued consumption worsened by the spread of new infectious disease coronavirus (COVID-19).
The move by the country’s fifth largest conglomerate’s retail unit could trigger a domino effect in the retail industry as its grocery rival E-mart also reported near 40-percent plunge in its bottom line for the fourth quarter.
Lotte Shopping at the same time will revamp its store site of 3.3 million square meters, bringing fresh energy to draw more visitors amid the ascending of e-commerce players.
The restructuring plan did not include layoffs. Earlier, it announced to change the job of up to 20 percent of its 2,000 headquarters staff to sales and marketing workforce.
“The restructuring plan is to reduce the operating loss and improve the financial status and corporate value, as well as to create synergy with business units,” said Kang Hee-tae, chief executive of Lotte Shopping. “The company aims to become a lifestyle service company, transforming from a typical retailer.”
The fourth-quarter results from Lotte Shopping were deemed shocking.
Its consolidated operating profit for the quarter ended December reached 43.55 billion won ($36.8 million), down 50.3 percent on quarter and 51.8 percent on year. Net loss stretched to 1.02 trillion won in the quarter, widening from 23.25 billion won loss three months ago and 449.2 billion won loss a year earlier. Sales lost 1.8 percent on quarter and 1.7 percent on year to total 4.32 trillion won.
For full 2019, Lotte Shopping’s operating profit shriveled 28.3 percent to 427.9 billion won from the previous year. Net loss also widened 83.6 percent to 853.6 billion won, with sales down 1.1 percent to17.63 trillion won.
Lotte Shopping shares on Friday were trading 2.88 percent lower at 118,000 won in Seoul.
By Kim Gi-jung and Lee Ha-yeon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]