LOTTE Himart Co (071840) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 5.5% year-over-year to 685.9 billion KRW, with gross profit improving by 6.2% due to better margins and cost controls.

• Operating profit dropped 13.8% year-over-year, impacted by one-time items and increased SG&A from direct hiring, but showed signs of recovery from H2 2024.

• Net income for Q3 2024 was 8.67 billion KRW, up from 7.64 billion KRW in Q3 2023.

• Online sales turned positive from June 2024, with ongoing investments in digital infrastructure and service diversification.

• Operates as a single business segment focused on electronics retail, with 327 offline stores and 11 logistics centers as of Q3 2024.

Financial highlights

• Gross margin rose to 32.2% in Q3 2024 from 28.6% in Q3 2023.

• EBITDA for Q3 2024 was 111.4 billion KRW.

• Net borrowings/EBITDA improved to 4.3x from 5.7x a year ago.

• Cash and cash equivalents at Q3 2024: 176.1 billion KRW, up from 121.4 billion KRW at year-end 2023.

• Q3 2024 cumulative revenue: 1,800.3 billion KRW, down from 2,031.6 billion KRW in Q3 2023.

Outlook and guidance

• Targets over 2.8 trillion KRW in sales and 100 billion KRW in operating profit by 2029, excluding one-off VAT refunds.

• Expects sales composition from PB and overseas brands to rise to 14% and e-commerce to 60% by 2026.

• Dividend payout ratio target set at 30% to enhance shareholder value.

• The electronics retail market remains mature, with growth driven by replacement demand and premium product trends.

• Company continues to invest in digital transformation and service expansion to capture evolving consumer needs.