Lotte Duty Free has reported sales of KRW4.16trn ($3.7bn) in the first nine months of 2018. This amounts to a +25% increase in total sales and +65% in overseas sales compared to the same period last year, when the Korean duty free industry was hit by the THAAD missile crisis.

The Korean superpower generated operating profit of KRW228.1bn during the nine-month period, an increase of +550% year-on-year.

According to the company, which registered sales of $2.4bn in the first half of the year, sales were driven by strengthened domestic and overseas marketing and overseas expansion. Domestic sales amounted to KRW3.8trn while sales from overseas operations reached KRW164.4bn.

OVERSEAS BUSINESS

In terms of its overseas business, which has shown ‘steep growth’ each year, Lotte has seven branches in countries such as Japan, Vietnam, Guam, Indonesia and Thailand. It will also enter the Australian duty free market following the recent acquisition of JR Duty Free. Overseas sales are expected to reach KRW200 billion this year.

Domestically, the retailer has enhanced its image and become more competitive through a brand advertising campaign launched in June. Driven by ‘aggressive marketing’, sales across its Seoul duty free shops rose +42% year on year. Online duty free sales grew +50%.

Heavily impacted by the aforementioned THAAD missile crisis in 2017 — thankfully relations between China and Korea appear to have improved— this year has seen Lotte reduce the rent it is paying to Incheon International Airport Corporation. This was after it exited three of its four loss making concessions at Seoul Incheon International Airport Terminal 1.

An increase in operating margin from 1% last year to 5.7% during the nine-month period is a strong sign that things are improving following a turbulent 2017.

Lotte Duty Free, which recently negotiated a significant agreement with AirAsia’s embryonic e-commerce marketplace Ourshop, generated total revenue of $5.2bn in 2017. This represents an -8.7% decline on the previous year, as estimated by TRBusiness in its annual Top 10 Operators Report.