[Courtesy of Lotte Mart]
The stock of Lotte Shopping, a key unit of South Korea's fifth-largest Lotte Group, soared more than seven percent with investors reacting positively to the reported sale of troubled supermarkets in China.
Lotte shopping rose 7.05 percent in midday trading to 235,500 won (208 US dollars). Market watchers gave a positive assessment of Lotte Shopping's decision to pick Goldman Sachs to manage the sale of Lotte Mart stores in China. It's not clear whether the group hopes to sell all or part of its hypermarket business.
Lotte has been the prime target of China's retaliatory onslaught that began after the group pushed for a land swap deal to let US troops set up a missile shield in its golf course. Lotte Mart has shut down more than 80 out of its business in China and the rest of its stores are struggling to keep their business with emergency funding.
It would be difficult to normalize Lotte Mart's operation in China even after consumers end their boycott, SK Securities said, adding the hypermarket chain could recoup losses by focusing on Indonesia and Vietnam. Daeshin Securities said Lotte Mart could save about 100 billion won annually by closing its business in China.
The group has injected an enormous amount of money in China, including a three-trillion won business complex in Shenyang. Construction of the complex has been suspended.
Lotte saw its group-wide earnings falling sharply in the second quarter of this year. The consolidated second-quarter operating profit of Lotte Shopping plunged 49 percent on-year to 87.3 billion won, according to the Financial Supervisory Service. Lotte Mart suffered a second-quarter operating loss of 77 billion won.
The retail giant heavily depends on Chinese consumers and tourists. Last year, about 70 percent of income at its duty-free stores came from Chinese visitors.
reporter
Lim Chang-won
cwlim34@ajunews.com
