Hypermarket duopoly strengthens in Homeplus’s wake ... Emart and Lotte Mart reap spillover gains

[Financial News] As Homeplus’s financial difficulties and store closures continue, easing competition in the hypermarket market is translating into improved results for Emart and Lotte Mart. In the third quarter, Emart’s discount stores, Traders and Everyday all grew, lifting its standalone operating profit by about 50%. Lotte Mart also posted an increase of nearly 90% in operating profit, buoyed by higher sales at its existing domestic stores.
According to the Financial Supervisory Service’s Data Analysis, Retrieval and Transfer System (DART) on the 11th, Emart’s standalone operating profit for the third quarter of this year rose 46.3% from a year earlier to 166 billion won. Total sales increased 11.1% to 5.104 trillion won, surpassing 5 trillion won for the first time on a quarterly basis. Standalone operating profit for the first three quarters combined also rose 28.8% year on year to 337.9 billion won.
The growth was driven by improved customer traffic in its core business. In the third quarter, visitor numbers rose from a year earlier by 5.3% at discount stores (Emart), 8.0% at Traders and 11.5% at Everyday. Sales and visitor numbers at the major discount event Goraeit Festa increased by 29.2% and 14.7%, respectively, while sales of the ultra-low-priced private label (PL) “5K Price” more than doubled.
Traders posted a record quarterly operating profit of 55.2 billion won, up 40.5%. Its total sales also reached a record 1.1668 trillion won, an increase of 16.6%. Everyday, the corporate-style supermarket (SSM), recorded an 11.1% rise in operating profit to 11 billion won and a 7.7% increase in total sales to 399.5 billion won.
However, earnings at affiliates weighed on results on a consolidated basis. Consolidated operating profit for the third quarter fell 69.6% year on year to 46.1 billion won. Net sales came to 7.4919 trillion won, up 1.2% from a year earlier. SSG.COM improved its earnings by 15.8 billion won year on year, and emart24 cut its operating loss by 4.9 billion won, but SCK Company posted an operating loss of 45.3 billion won, affected in part by the suspension of e-Frequency.
Lotte Mart also showed a clear improvement in performance. Its third-quarter operating profit jumped 87.5% year on year to 21.6 billion won, while sales rose 9.7% to 1.4626 trillion won. Sales at existing domestic stores increased substantially amid the base effect from consumer coupons, differences in holiday timing and softer competition. Despite initial costs for the Zeta Smart Center, strong offline operations helped the domestic business post operating profit of 17.9 billion won.
Industry watchers are focused on the possibility that the “two-horse race” will intensify as existing customers shift to Emart and Lotte Mart the longer Homeplus’s operational uncertainty persists. They say competition among hypermarkets has eased as Homeplus, despite resuming operations last August, has already closed around 40 stores this year.
“The healthy growth in same-store sales at discount stores in the third quarter is partly due to spillover benefits from Homeplus store closures,” an industry source said. “We expect same-store growth to slow in the fourth quarter as the base effect fades, but believe modest growth will continue.”
[email protected] Kim Hyun-ji Reporter