LOTTE Himart Co (071840) Q2 2024 earnings summary

Executive summary

• Recorded an operating loss of 13.3 billion KRW in 1H 2024, improving by 4.7 billion KRW year-over-year despite a 14.7% revenue decline to 1,114.4 billion KRW.

• Operates as a leading electronics retailer with 329 offline stores and 11 logistics centers as of June 2024, focusing on white goods, home/kitchen appliances (66% of sales), and video/IT electronics (34%).

• Online sales are conducted via the company’s e-commerce platform, with ongoing investments in digital infrastructure and customer service enhancements.

• The company maintains a strong market position but faces challenges from high interest rates and a stagnant offline appliance market.

• Strategic transformation initiatives, including store renewal, PB product launches, and service expansion, are showing early positive signals but require more time for full impact.

Financial highlights

• Revenue fell 14.7% year-over-year to 1,114.4 billion KRW in 1H 2024; offline sales dropped 10.7%, online sales plunged 39.2%.

• Operating loss narrowed by 4.7 billion KRW year-over-year to 13.3 billion KRW.

• Net loss continued, with a 1H 2024 net loss of 18.1 billion KRW, impacted by lower revenue and one-off tax effects.

• EBITDA for 1H 2024 was 453 billion KRW, up from 450 billion KRW in 1H 2023.

• Basic EPS: -782 KRW (vs. -687 KRW in 1H 2023).

Outlook and guidance

• Full impact of transformation strategies expected to materialize over time, with continued focus on store renewal, PB product launches, and service innovation.

• Second half of 2024 will emphasize workforce restructuring, direct hiring, and further e-commerce enhancements.

• The company expects continued market pressure from high interest rates and slow real estate activity, impacting consumer demand for large appliances.

• Plans to strengthen online competitiveness and expand service offerings to offset offline market stagnation.