Lotte Duty Free in shock Seoul licence loss
South Korea’s Lotte Duty Free has lost the licence to operate one of its large stores in downtown Seoul.
Beleaguered Lotte – in the midst of a family feud over its management and on the eve of a planned IPO of its Hotels unit – has been displaced by heavy industries company Doosan Co in the 10,990 sqm store in South Korea’s tallest building – the Lotte World Tower and Mall.
Lotte has had the licence to run the store for five years and sunk US$255 million into the site.
“The customs agency decision has shattered its ambitions to grow it into the world’s largest duty-free outlet over the next decade,” reported Japan Today newspaper in Tokyo.
“The setback was particularly badly timed given the preparations for an initial public offering of shares in Lotte’s hotel unit, which runs the group’s duty-free business.”
Lotte’s duty free business is a subsidiary of Lotte Hotels, contributing 80 per cent of the operation’s revenues.
Park Jong-Dae, analyst at Hana Financial Securities, said investors are concerned the loss of the licence will hurt Hotel Lotte’s overall profits.
“As a result, the company’s valuation may fall when it goes public,” he said.
Lotte Duty Free’s flagship Myeong-dong store is unaffected.