South Korea’s Lotte Shopping Co. reported near 17 percent drop in its operating profit for the second quarter from a year earlier as the heavy loss from its discount store unit Lotte Mart ate into strong profits from other units, but it projected a better earnings outlook with its exit from China to be completed by the end of this year.

Lotte Shopping in a regulatory filing on Friday said its operating profit shrank 16.95 percent to 34.9 billion won ($30.9 million) in the second quarter ended June from a year earlier and logged a net loss of 213. 9 billion on a consolidated basis. Its sales rose 0.5 percent to 4.4 trillion won over the cited period.

For the first six month period, its operating profit rose 1.6 percent on year to 199.8 billion won and sales fell 0.9 percent to 8.8 trillion won.

On Friday, Lotte Shopping shares gained 0.25 percent and closed at 204,500 won.

By unit, its department store and electronic goods retailer delivered sharp improvement in earnings. Lotte Department Store booked an operating profit of 200 billion won for the first half, up a whopping 30 percent from a year earlier, and revenue grew 2.1 percent on year to 1.6 trillion won thanks to strong fashion and living goods sales as well as its overseas branches’ brisk performance.

Lotte Hi-Mart, electronic goods retailer saw its operating profit soar 10.9 percent on year to 108.0 billion won in the first half while sales expanded 4.2 percent to 2.0 trillion won over the cited period after its strategy to expand online sales worked out well, said the company.

But Lotte Mart, discount and grocery store unit, delivered an operating loss of 122.0 billion won and its sales sank 7.2 percent on year to 3.1 trillion won in the first six months this year while it continued to overcome the setback in China on top of sluggish domestic demand. The company had been hit by Beijing’s punitive action and consumer boycott on Korean products after its parent Lotte Group yielded its golf course location to host the U.S. anti-missile system. Now, it has sold nearly all of its stores in China.

The company projected its business would get better soon as it would be completing Lotte Mart’s exit from China by the end of this year and the discount store unit’s branches in Southeast Asia are on a strong growth momentum.

By Lee Han-na and Cho Jeehyun

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