Enter 2021.01.14 06:00
Reduced about 2000 people including fixed-term employees…100 low performers were also removed
‘Choice and Concentration’… seems to achieve the goal within 2 years
Lotte Shopping begins restructuring to recover profitability. There are only 100 stores planned to close this year.
According to the distribution industry on the 14th Lotte Shopping (023530)Has closed 114 stores in the last 10 months. In February of last year, half of the target was achieved within a year after announcing the restructuring plan to close 200 stores with less profitability out of 700 offline stores. This year, stores are expected to be organized at a similar level to last year. It is highly likely that the restructuring deadline, which was originally expected to be 3 to 5 years, will be completed within two years.
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The effect of restructuring began to appear in the third quarter of last year. Lotte made a net loss of 1990 billion won in the second quarter of last year. However, in the third quarter, it recorded a net profit of 3 billion won and turned to the black. This is because many stores are closed, reducing the fixed cost burden. Increasing indoor living due to working from home, etc., also affected the increase in demand for food.
◇Perform human restructuring…Relocate stores for regular employees, withdrawal of underperformers
Kang Hee-tae, vice chairman of Lotte Shopping, formed the’executive’ for restructuring. Vice Chairman Kang, who was the representative of the department store, has been leading the improvement of the constitution after becoming the head of the distribution business unit (BU) and CEO of Lotte Shopping in 2019.
He was also called “a field leader with a soft charisma,” but recently there are stories that he has changed. It is because they are taking an aggressive move of cutting down rotten trees. By closing 114 stores last year, the company also restructured its manpower to reduce 1994 employees (January to September). Full-time employees working at the store relocated to a nearby store, but employees who did not agree to the relocation resigned.
Vice-Chairman Kang has a greater responsibility. Lotte Group chairman Shin Dong-bin resigned from the position of registered director of Lotte Shopping in February last year, and in August, the group’s second leader, Hwang Gak-gyu, left.
Vice Chairman Kang, who also served as the representative of Lotte Asset Development, emphasizes’choice and concentration’. Robs, whose performance was poor, was absorbed and integrated into the product planning (MD) headquarters in Lotte Mart. It aimed to improve management efficiency by reducing the business division to 4 department stores, marts, supermarkets, and e-commerce. Launched in 2013, Robs grew in size due to the growth of the H&B market, but had a total operating loss of 2172 billion won by the third quarter last year.
In addition, Lotte Shopping will take over six stores, including Lotte World Mall Jamsil Branch, and Lotte Mall Gimpo Airport, Eunpyeong, Suwon, Suwon, Suji, and Sanbon as of the first of next month. Lotte Shopping, which was operated by Lotte Asset Development, will be transferred to Lotte Shopping to create synergy in group distribution sectors such as department stores, outlets, shopping malls, and online.
This also works with Chairman Dongbin Shin’s order. On the 13th, Chairman Shin emphasized, “Please focus on creating synergy by combining the strengths and capabilities of each company” at the Value Creation Meeting (VCM), a presidential group meeting with representatives and executives of each affiliate.
Lee Jin-hyup, an analyst at Yuanta Securities, said, “The restructuring effect will begin in earnest from this year.” “I will make it.”
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