Lotte Hi-Mart Maintains Dividends Despite Years of Net Losses
Lotte Hi-Mart has continued to distribute dividends to shareholders even as the company has faced five consecutive years of net losses. This has been made possible by utilizing capital surplus, accumulated from previous stock issuances, to fund the payouts. The company is now focused on a turnaround strategy aimed at improving profitability and sustaining its shareholder-friendly dividend policy.
Dividend History and Recent Decisions
On March 16th, Lotte Hi-Mart announced a dividend of 300 won per share for the previous fiscal year, totaling 6.9 billion won.1 This marks the fourth consecutive year the dividend has remained at this level.
Financial Performance Overview
Despite consistent dividend payments, Lotte Hi-Mart’s financial performance has been challenging. The company reported sales of 2.3 trillion won, an operating profit of 9.6 billion won and a net loss of 2.4 billion won for the last fiscal year.1 Over the past five years (2021-2025), sales have declined from 3.8697 trillion won to the recent 2.3 trillion won, and operating profit has significantly decreased from 106.8 billion won to 9.6 billion won. The cumulative net loss over this period exceeds 928.3 billion won.1
The Role of Capital Surplus
The ability to maintain dividends during this period of net losses stems from Lotte Hi-Mart’s substantial capital surplus, which stood at approximately 1 trillion won. Capital surplus represents funds received from shareholders beyond the par value of the stock. While typically used to cover losses or reinvested, it can be converted to retained earnings through a shareholder vote, enabling dividend payments.1
In March 2024, Hi-Mart transferred 300 billion won from capital surplus to retained earnings, and repeated this in March 2025, providing the necessary funds for dividend distribution. As of the end of 2024, the remaining capital surplus was 445.2 billion won, potentially allowing for further dividend resources in the future.
Improving Financial Health
Beyond the capital surplus, Lotte Hi-Mart is similarly showing signs of improving overall financial health. Total borrowings have decreased from 633 billion won in 2023 to 407.4 billion won in 2024.1 This reduction in debt has led to a decrease in interest expenses, falling from 34 billion won to 27.6 billion won over the same period. Cash equivalents have also seen a decline, from 121.3 billion won in 2023 to 64.7 billion won in 2024.
Future Outlook and Strategy
Lotte Hi-Mart has outlined a corporate value improvement plan with goals of achieving 2.4 trillion won in sales and 30 billion won in operating profit for the current year.1 Looking ahead to 2029, the company aims for sales of 2.8 trillion won and operating profit of 100 billion won. The company is targeting a dividend payout ratio of 30%. This turnaround strategy focuses on four core areas: store innovation, customer service enhancement, product diversification, and strengthening its online presence.
According to a Lotte Hi-Mart official, the continued dividend payments reflect a commitment to a shareholder-friendly policy and a plan to increase corporate value.
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