Lotte Shopping may improve its profitability, but it will not be easy for it to achieve a significant improvement in its earnings, said NH Investment and Securities on Feb. 15, lowering the target price to 230,000 won (US$203.95) from 240,000 won. 

The company’s earnings last year were hugely disappointing, with only 6.13 trillion won in revenue and 90.3 billion won in operating profit -- respective on-year declines of 7 percent and 73 percent. Restructuring underperforming stores at home and abroad cost 65.4 billion won and led to an earnings shock, said analyst Lee Ji-yeong. Even setting aside the one-off costs, operating profit still is 21 percent lower than expected, she said.

Earnings expectations should be lowered, as the company faces a sluggish retail environment and heightened competition from online stores. Profits are likely to improve, though, as the retailer reshuffles its department stores and scales down less successful product categories at hypermarkets, said the analyst, maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)