Lotte Shopping (023530) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue and operating profit declined due to weak domestic consumption and sluggish grocery and cultural divisions, but H1 2025 operating profit rose 11% year-over-year, driven by strong department store and overseas operations.

• Overseas operations, especially in Vietnam, continued to improve, with Lotte Mall Westlake Hanoi posting a second consecutive quarterly operating profit.

• The company operates a diversified retail business with 33 consolidated subsidiaries across department stores, hypermarkets, electronics, supermarkets, home shopping, cinema, e-commerce, and other segments as of June 30, 2025.

• Recent strategic moves include the absorption of Lotte Incheon Town and Lotte Suwon Station Shopping Town via small-scale mergers to enhance operational efficiency.

• The company maintains strong credit ratings (AA- for bonds, A1 for commercial paper) and has robust risk management practices.

Financial highlights

• Q2 2025 consolidated revenue was KRW 3,350 billion, down 2.3% YoY; operating profit was KRW 31 billion, down 27.5% YoY; net loss narrowed to KRW 10 billion.

• H1 2025 revenue was KRW 6,806.5 billion, down 1.9% YoY; operating profit was KRW 188.9 billion, up 10.5% YoY; net profit attributable to owners was a loss of KRW 4.2 billion.

• EBITDA for Q2 2025 was KRW 290 billion, down 10.8% YoY; H1 2025 EBITDA was KRW 686 billion, down 3.5% YoY.

• Department store revenue fell 2.7% YoY to KRW 786 billion, but OP rose 15.7% YoY to KRW 63 billion due to SG&A optimization.

• Lotte Hi-Mart revenue grew 0.8% YoY to KRW 594 billion; OP surged 277.4% to KRW 16 billion.

Outlook and guidance

• Department store expects similar conditions to last year, with renovated stores and foreign customer sales driving about 1% growth in H2.

• Ongoing cost efficiency and business transformation initiatives are expected to support profitability.

• The company aims to maintain a shareholder return ratio of at least 35% and a minimum annual dividend of KRW 3,500 per share through 2026.

• E-commerce industry in Korea is expected to see single-digit growth in H2, but vertical players and company’s vertical focus aim for double-digit growth.

• Overseas department stores and hypermarkets, especially in Vietnam, are expected to maintain strong growth through year-end.