Lotte Shopping Co., South Korea’s retail giant, aims to double its profit in three years by expanding its Southeast Asian business and cementing its leadership at home, while it seeks new businesses with information technology for future growth.
Lotte Shopping said on Tuesday it targets an operating profit of 1 trillion won ($753.3 million) by 2026 based on sales of 17 trillion won. The operator of South Korea’s top department store chain Lotte Department Store expects the profit to rise 30.8% to 505 billion won in 2023 from the previous year, although revenue is likely to dip 5.8% to 14.6 trillion won.
“We aim to become customers’ first shopping destination from the next year based on the core management philosophy of customer-centered value after focusing on improving profitability and efficiency this year,” said Lotte Shopping Vice Chairman and co-CEO Kim Sang-hyun told chief investment officers of the country’s major asset managers during its IR event.
The ambition pushed up Lotte Shopping’s share price to a five-week high of 76,400 won. The stock ended up 3.8% at 75,800 won in Seoul’s main stock market where the main Kospi lost 0.6%.
EXPANSION IN SOUTHEAST ASIA, LEADERSHIP IN KOREA
Lotte Shopping plans to expand its overseas business, especially in Southeast Asian countries such as Vietnam and Indonesia.
In South Korea, Lotte Shopping aims to cement its leadership in the department store sector by taking the throne in some key commercial places. The company plans to renovate major department store branches while opening new stores in various areas such as Songdo, an international business district in the country.
The integrated operation of Lotte Mart and Lotter Super has been cutting costs and improving product quality and price competitiveness since last year, Lotte Shopping said. The company plans to establish an integrated next-generation system in the mid to long term in order to further reduce IT and logistics expenses for better profitability.
RETAIL TECH COMPANY
Lotte Shopping unveiled another goal to become a company specializing in retail tech. It aims to find fresh profit sources through a new business with artificial intelligence technology linking the retail industry based on data on 42 million customers.
The retail behemoth targets an integrated media platform business, which provides personalized advertising solutions by converging data assets with adtech.
The company aims to set up a generative AI promotion team specializing in the retail industry to automate advertising production and consult with customers based on AI in stages.
Lotte Shopping plans to build six customer fulfillment centers (CFCs) for a sales target of 5 trillion won by 2030 across the country in partnership with Ocado Group, the British online supermarket and technology group.
The South Korean company is set to start the construction of the first CFC in Busan, South Korea’s second-largest city, around the end of this year with a schedule to open it in 2025.