Seoul: Lotte Shopping Co., an affiliate of South Korea's Lotte Group, reported a significant increase in its net losses for the fourth quarter, primarily attributed to one-off costs. The company disclosed that its net losses for the quarter ending in December expanded to 1 trillion won (US$695.3 million), a stark rise from 66.94 billion won recorded in the same period the previous year.
According to Yonhap News Agency, the company's regulatory filing highlighted several factors contributing to this financial downturn. A provision amounting to 53.2 billion won for ordinary wages, prompted by a recent court ruling, alongside sluggish sales amid a prolonged economic slowdown, played pivotal roles in affecting the bottom line. The Supreme Court's decision in December, which mandated the inclusion of regular periodic bonuses in ordinary wages, is anticipated to compel businesses to allocate more funds for wages and severance pay.
Lotte Shopping also experienced a 27 percent decline in its operating profit, which fell to 147.2 billion won in the fourth quarter from 202.3 billion won in the previous year. Additionally, sales decreased by 4.3 percent, dropping to 3.47 trillion won from 3.63 trillion won in the same timeframe.
For the entirety of 2024, the company reported a net loss of 984.26 billion won, a reversal from a net profit of 169.18 billion won the prior year. Operating profit saw a 6.9 percent decline to 147.2 billion won, while sales decreased by 3.9 percent to 13.9 trillion won.
As the operator of South Korea's largest department store chain by sales and the second-largest discount store chain, Lotte Shopping has set ambitious targets for this year. The company aims to achieve an operating profit of 600 billion won on projected sales of 14 trillion won.