Korea's three major department store operators — Lotte Shopping, Shinsegae, and Hyundai Department Store — are poised to extract meaningful profit gains from business restructuring, according to an analysis published on the 17th by Hana Securities.

39% Operating Profit Growth Forecast, With Restructuring Driving a Third of It

Hana Securities Research Centre projects that the three groups' combined consolidated operating profit will rise 39% in 2026 based on market consensus. Of that increase, 10 percentage points are attributed specifically to business restructuring and portfolio rationalisation, rather than to top-line revenue growth.

Lotte Shopping: Pruning Underperforming Stores and Narrowing E-commerce Losses

Lotte Shopping is expected to deliver a 5% increase in operating profit through two levers: closing low-productivity stores and moving its e-commerce arm closer to breakeven.

- The company is scrapping roughly one underperforming department store per year, generating an estimated 5 billion won in annual profit improvement per closure. - The operating loss at Lotte On, its e-commerce platform, is forecast to narrow from 29 billion won in 2025 to 15 billion won in 2026. - A degree of uncertainty remains in the second half of the year, however, following the launch of "Zeta", a new online grocery business.

Shinsegae: Flagship Renovation and Duty-Free Retrenchment

Shinsegae is forecast to post the sharpest improvement among the three, with operating profit projected to rise 16%.

- Since the November 2025 reopening of its renovated Myeong-dong main building, Shinsegae has recorded a 60% year-on-year sales increase through June 2026, with the renovation expected to contribute an incremental 35 billion won to annual operating profit. - The Incheon Airport DF2 duty-free concession, which had been generating operating losses of more than 50 billion won per year, ceased operations in April this year, removing a significant drag on group profitability.

Hyundai Department Store: Exiting Dongdaemun Duty-Free and Cutting Costs at Zinus

Hyundai Department Store is expected to achieve an 11% improvement in operating profit.

- The group withdrew from its Dongdaemun duty-free store in August 2025, eliminating an annual operating loss of approximately 40 billion won. - Its subsidiary Zinus, a mattress and furniture maker, will reduce fixed costs by 10 billion won per year following the sale of its Georgia manufacturing plant in the United States. - Over the medium to long term, Hyundai plans to achieve a further 50 billion won in cost savings through workforce restructuring and rationalisation of its regional sales channels.

Sector Outlook

Hana Securities reiterated its Overweight rating on the Korean retail sector.