SEOUL, Feb. 13 (Korea Bizwire) – Lotte Duty Free, South Korea’s No. 1 duty-free retailer, said Tuesday it will partially close down its operations at the country’s main gateway mainly due to a sharp drop in sales.
Lotte Duty Free said it has filed an official request with Incheon International Airport Corp. (IIAC) to withdraw some of its shops, located in the first terminal of the airport. It said the closures will not include liquor and tobacco operations.
The stores, after remaining open for 120 more days, will close 17 years after the company was first picked as the operator.
Lotte has been suffering a sharp decline in sales after Chinese travelers took cues from Beijing and stayed away from its stores. China last year ordered its travel agencies to stop selling group package tours to South Korea, although there has been a thawing of relations since then.
The company and the airport operator also have been in talks on Lotte’s request to adjust the leasing fee to reflect lower sales. The retailer has claimed it could not pay rent for the remaining period of its five-year contract due to drastic changes in the business climate.
“The company suffered serious business losses as the number of Chinese tourists nearly halved following the deployment of the U.S. anti-missile system in March,” said a company official who asked not to be named.
China has opposed the deployment, while Seoul said the move is to counter North Korea’s nuclear and missile threat.
Lotte Duty Free signed the deal with the IIAC to pay rent totaling 4.1 trillion won (US$3.6 billion) from September 2015 to August 2020.