Hotel Lotte Co., a hotel and duty-free operator of Lotte, said the operating profit of its duty-free unit plummeted to a record low in 2017 amid a diplomatic row between the Republic of Korea (RoK) and China over a US missile defence system.
Lotte Duty Free's operating income was 2.5 billion won (US$2.4 million) in 2017, with sales reaching 5.45 trillion won.
The weak bottom line was widely forecast as the retailer has been suffering from China's apparent retaliation over the deployment of the Terminal High Altitude Area Defence (THAAD) battery here.
The company said its profitability is expected to improve as it moves to stabilise its businesses at home and abroad, adding that it will focus on strengthening the competitiveness of its duty-free stores in Seoul after it recently began the process to end its concession deal at Incheon International Airport – a main gateway to the RoK.
The retailer aims to expand its global reaches and diversify its customer portfolio, which had been heavily reliant on Chinese tourists.
Sales from its overseas outlets came to 140 billion won in 2017, up 45% annually.