Lotte Shopping will sell 121 stores within this year as its retail businesses are taking the brunt of the COVID-19 pandemic, the company announced.
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Korea’s leading department store operator was scheduled to offload nearly 30 percent or 200 of the 700 stores ― including department stores, supermarkets and large discount stores ― within the next three to five years to strengthen its e-commerce business as more consumers prefer to buy online.
However, the pandemic has sped up the restructuring process as the company recorded a devastating loss in the first quarter this year.
“We have decided to swiftly sell off less profitable assets to enhance our financial situation as it has been heavily affected by the COVID-19 outbreak,” a Lotte Shopping official said in a conference call after releasing its first-quarter earnings results on 14th May.
The company plans to close 121 stores, including five department stores, 16 discount stores, 75 supermarkets and 25 LOHB’s outlets, by the end of the year.
The move comes after the company suffered a 43.33 billion won ($35 million) net loss in the first quarter this year, a huge drop in profitability after a 109.17 billion won net profit in the same period last year. The slump was mainly due to the coronavirus pandemic as fewer people visited offline stores.
Lotte Shopping claims there will be no forced layoffs from the shutdown, with employees being transferred to other stores. However, industry watchers believe lay-offs will be inevitable as 17 percent of the stores are set to close this year.
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Despite the losses in the offline sector, Lotte Shopping hopes to rebound via its online businesses. The company launched an online shopping website called “Lotte On” last month which integrated Lotte’s eight affiliates including its Department Store, the electronics unit Himart, Lotte Home Shopping and Lotte Duty Free.