Korea Investment & Securities projected on June 9 that Lotte Shopping will benefit from strong department store sales and the closure of Homeplus locations, raising its target price from 200,000 won to 230,000 won. The firm maintained its "buy" rating.
Kim Myung-joo, a researcher at Korea Investment & Securities, stated, "The department store industry is entering a phase of structural growth, and the operating profit leverage effect for Lotte Department Store will continue throughout this year." He noted that both metropolitan and regional department stores are showing healthy sales trends.
He added, "In the first quarter of this year, sales at Lotte Department Store's regional locations increased by 10% compared to the same period last year," explaining that stores that previously underwent asset write-downs due to sluggish regional markets are now contributing to improved performance as sales rise.
Kim also highlighted the increase in foreign tourists visiting Busan, stating, "Lotte Department Store, which has the most locations in Busan, is expected to benefit from this trend."
Looking ahead to the second half of the year, he expressed optimism about the benefits from Homeplus store closures. Kim noted, "With Homeplus deciding to close a total of 54 stores, existing Lotte Mart and Super locations are showing good performance," predicting that the growth rate for existing Lotte Mart stores will increase by 1.8 percentage points on an annual basis.
He concluded, "After a prolonged period of underperformance, Lotte Shopping is entering a normalization phase for most of its business divisions, excluding electronics retail, starting this year," and added that he adjusted performance estimates upward to reflect better-than-expected results from the department store division.
* This article has been translated by AI.
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