Lotte Mart exiting Beijing

Date : 26 April 2018

Lotte Mart has agreed a deal with Chinese retailer Wumei Holdings Inc. to sell its 21 stores in Beijing.

The deal

Lotte will sell 87.38% stake of its Lotte Mart stores in Beijing to Wumei Holdings Inc. for CNY1.42bn (US$224m). Wumei operates Beijing-based supermarket, Wumart, covering mainly northern parts of China. To ensure a smoother transition for the stores, Lotte will maintain a 5% share in the affiliate.

The background

In September last year, Lotte Mart China was listed for sale after a large proportion of store closures post-March 2017. THAAD political tensions between South Korea and China have caused uncertainty for Korean retailers, felt more strongly by those more reliant on inbound Chinese tourism and those who operate in China.

Our view

While tensions between the two countries have thawed in recent months, the impact of the THAAD saga has made it difficult for Lotte to recover. Earlier this year, South Korean rival E-Mart exited the country after a long period of uncertainty. We believe that this is the first phase of Lotte restructuring in China. Further announcements in relation to its Lotte Mart outlets in Chongqing, Chengdu, Shenyang and Jilin are likely later this year. 


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