[Edaily Reporter Kim Yoon-jung] Kiwoom Securities noted that #Lotte Shopping’s growth rate at existing department stores is exceeding expectations and that the positive spillover effects from the discount store segment are expanding. The firm maintained its “Buy” rating and raised its target price to 230,000 won from the previous level.

On the 10th, Park Sang-jun, an analyst at Kiwoom Securities, stated, “The wealth effect driven by the strong domestic stock market and the impact of increased foreign sales are proving stronger than expected,” adding, “We have revised our earnings estimates upward to reflect strong department store sales and the spillover benefits from the closure of Homeplus discount stores.”
Kiwoom Securities projected Lotte Shopping’s consolidated operating profit for the second quarter of this year at 104.5 billion won. This represents a 157% increase compared to the same period last year.
Researcher Park explained, “Driven by factors such as the increase in Chinese inbound tourists, foreign sales are expected to grow approximately twofold year-over-year.” He added, “Reflecting the strengthening sales growth centered on the Main Store, Jamsil Store, and Dongtan Store, we have revised upward our forecast for same-store sales growth at domestic department stores in the second quarter to 14% on a comparable basis.”
The discount store segment is also expected to continue its upward trend. He analyzed, “Domestic discount stores are expected to record a same-store growth rate of around 2% in the second quarter—a slight improvement from the first quarter—driven by strong domestic consumer sentiment and the spillover benefits from Homeplus’s store closures,” adding, “Overseas operations will also continue to perform well, particularly in Vietnam.”
The annual earnings outlook was also raised. Kiwoom Securities revised its forecast for Lotte Shopping’s annual operating profit this year upward to 814.6 billion won. This represents a 49% increase year-over-year.
Analyst Park said, “As same-store sales at department stores continue to grow at a double-digit rate in the second half of the year, annual operating profit for department stores is expected to reach 677.6 billion won, a 38% increase from the previous year,” adding, “We raised our annual earnings forecast to reflect the stronger-than-expected growth trend in department store sales.”
He forecast that the strong sales momentum in the department store sector would continue in the medium term. “Stock indices are rising on the back of strong earnings from major domestic companies,” he explained. “Based on this year’s solid performance, we also expect the effects of incentive payments and wage increases at major companies early next year.” He further noted, “With the increase in foreign tourists, particularly from China, the share of foreign sales—currently around 6%—is highly likely to rise structurally.”
He added, “The domestic discount store business is also likely to see significant spillover benefits from the expansion of Homeplus store closures,” noting, “There is room for further upward revisions to earnings estimates in the medium term.”