Lotte Shopping reported a sharp increase in first-quarter 2025 operating profit on Friday, as cost-cutting in its department stores and improved overseas performance helped offset the domestic consumption slump.

Consolidated operating profit for the January to March period totaled 148.2 billion won ($105.4 million), up 29 percent from a year earlier. However, revenue slipped 1.6 percent to 3.46 trillion won and net income fell 75.1 percent to 18.1 billion won.

In the department store segment, revenue fell 1.1 percent to 806.3 billion won due to closures such as the Masan location. However, remodelling efforts at key stores like the main branch and Jamsil helped boost same-store sales by 1 percent. Operating profit from the segment jumped 44.3 percent to 130 billion won thanks to efficiency measures.

Overseas operations were a major contributor to the improved performance. Sales at the Lotte Mall West Lake Hanoi, which fully opened in September 2023, rose 21.9 percent and the branch turned a profit for the first time in six quarters. The overseas department store segment posted an overall 6.2 percent sales gain and returned to profitability.

In contrast, hypermarkets and supermarkets remained sluggish. Hypermarket revenue rose 0.3 percent to 1.49 trillion won, but operating profit fell 34.8 percent to 28.1 billion won. Supermarket revenue declined 7.2 percent to 305.2 billion won and operating profit plunged 73.3 percent to 3.2 billion won. These units were hit hardest by weak consumer sentiment and losses from the transfer of e-grocery operations and labor-related costs.

Still, overseas discount store operations in Vietnam and Indonesia offset some of the domestic weakness, with operating profit up 20.6 percent to 21.4 billion won.

Lotte’s e-commerce unit, Lotte ON, saw a 12 percent rise in gross merchandise volume but revenue fell 5.0 percent to 28.3 billion won due to portfolio restructuring. Nonetheless, operating loss narrowed sharply to 8.6 billion won from 22.4 billion won a year ago, as profitability improved and costs were cut.

Lotte Homeshopping posted stable sales of 227.6 billion won and a 22.9 percent rise in operating profit to 12.1 billion won. The unit has been posting significant quarterly profit gains since the fourth quarter of 2023, suggesting momentum in its profitability turnaround.

In contrast, Cultureworks - the operator of Lotte Cinema - saw revenue fall 24.9 percent to 86.3 billion won due to a lack of blockbuster releases. The division slipped into the red with an operating loss of 10.4 billion won.

Lotte Shopping plans to build on its first-quarter momentum by pursuing further earnings improvements throughout 2025. The company will renovate key department stores such as the main and Jamsil branches to solidify its retail dominance and secure more sites abroad for future mixed-use developments.

For hypermarkets and supermarkets, the focus will be on fresh food innovation to reposition them as South Korea’s leading grocery channels, while overseas expansion is expected to strengthen global competitiveness.

The e-commerce division will boost capabilities in fashion and beauty and function as a “gateway” connecting Lotte’s online and offline retail channels. Meanwhile Lotte Homeshopping aims to ramp up tailored marketing for core demographics in their 50s and 60s and expand content-based businesses to enhance competitiveness.

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