Lotte Shopping (023530) Q4 2024 earnings summary

Executive summary

• FY24 consolidated revenue declined 3.9% YoY to KRW 14.0 trillion, with operating profit down 6.9% to KRW 473 billion, mainly due to one-off expenses and asset impairment losses.

• Q4 2024 revenue and operating profit fell short of prior guidance, with gross sales down KRW 630.7 billion YoY, mainly due to internal efficiency improvements and store restructuring.

• Profitability initiatives are showing results, with renovated stores delivering double-digit sales growth.

• One-off personnel expenses of KRW 53.2 billion were recognized due to a Supreme Court ruling on ordinary wages.

• Land revaluation increased book value by KRW 9.5 trillion, improving the debt ratio by 61.8 percentage points.

Financial highlights

• Q4 revenue: KRW 3.5 trillion, down 4.3% YoY; annual revenue: KRW 14.0 trillion.

• Q4 operating profit: KRW 147 billion, down 27.3% YoY; excluding one-offs, OP would be KRW 211.3 billion, down 4.4% YoY.

• Annual operating profit: KRW 473 billion; excluding one-offs, KRW 537 billion, up 5.7% YoY.

• Net loss expanded due to impairment losses from land revaluation; annual net loss: KRW 984.3 billion.

• Gross profit margin improved to 48.2%, up 1.7 percentage points YoY.

Outlook and guidance

• 2025 guidance targets consolidated revenue of KRW 14 trillion and operating profit of KRW 600 billion.

• Focus on growth and profitability in new and overseas businesses, with plans reflecting ongoing domestic and global risks.

• Department stores expect balanced growth in 2025, supported by renovations and frequent customer events.

• Supermarket and hypermarket segments anticipate double-digit growth, leveraging private brands and fresh food categories.

• E-commerce to accelerate restructuring, focusing on fashion and beauty verticals and advertising growth.