SEOUL — Lotte Duty Free, South Korea’s top duty-free retailer, announced a voluntary retirement scheme among other austerity measures on Tuesday to address its declining profitability.
According to Yonhap News Agency, the company will introduce a voluntary retirement program, implement a 20% salary reduction for all executives, and reorganize its business structure. Kim attributed the need for these drastic measures to a combination of inflation, a weak currency, and other sudden changes in the external business environment following the COVID-19 pandemic. The company plans to cut marketing expenses and reduce sales floor space to improve efficiency and profitability. Despite an increase in tourist arrivals post-pandemic, the decline in shopping-focused group tourists, particularly from China, has severely impacted the company's financial health. Lotte Duty Free has reported operating losses for three consecutive quarters, with accumulated net losses amounting to 53.7 billion won. The company operates 21 duty-free shops across seven countries, including seven in South Korea, with its competitors also facing similar challenges in the current market.