Will Shin Yoo-yeol fix Lotte's slumping companies?

Lotte World Tower in Seoul is shown under an overcast sky in this photo from January 2020. Newsis

Lotte Group's Vice President Shin Yoo-yeol / Courtesy of Lotte Group

Eyes are on Shin Yoo-yeol, the eldest son of Lotte Group Chairman Shin Dong-bin and the group’s new vice president. The younger Shin was the former chief of the group’s Future Growth Office and was promoted to the position of vice president on Nov. 28.

The third-generation member of the group's owner family is young — 38 years old — and has experience in Lotte Group's finance divisions. However, there are concerns on whether the new executive will be able to haul the group’s slumping subsidiaries that need immediate restructuring and strategic planning to overcome money-losing businesses.

Shin’s promotion came amid the group’s latest reshuffle of C-level and other executive positions for the next year by the board of directors. Among the group's 58 subsidiaries, 18 CEOs were replaced, a sign of determination by the group that had announced "emergency management" due to disappointing performances by some of its key subsidiaries.

Twenty-two percent of the entire directorial board have stepped down in the sweeping reshuffle. In the end, the board was downsized by 13 percent compared to last year. The group wanted to streamline the board and replace departing directors with younger blood to improve its troubled subsidiaries in the shopping and chemical sectors.

According to industry watchers, the younger Shin has yet to achieve a major breakthrough since he moved to Lotte Corp., the group’s holding company, last year. This raised questions on whether the new vice president will fare well with even greater responsibilities.

As a vice president, Shin's main job is securing future growth engines for Lotte. But it remains a challenge because Lotte Chemical and Lotte Shopping, which used to be the group's cash cows, have been struck with sluggish sales and unprofitable operations.

Lotte Chemical's ethane cracking center in Louisiana, United States / Courtesy of Lotte Chemical

Lotte Shopping’s e-commerce platform, Lotte ON, logged an accumulative deficit of 61.5 billion won ($44 million) throughout the first to third quarter this year. Lotte Duty Free, another subsidiary of Lotte Shopping, registered a deficit of 46 billion won in the third quarter, the largest loss among the country’s big four duty free giants. To reduce the damage, Lotte Shopping began shutting down selected duty free stores with the worst overseas sales performances.

Lotte Chemical saw a deficit of 660 billion won in the third quarter. Lotte Biologics, where the younger Shin currently directs the global strategy division, turned a deficit in the third quarter with an operating loss of 20 billion won.

The challenge now for the newly appointed Shin will be how to herd these cash-strapped companies to maximize their outputs while recovering their losses. Discovering new businesses and strategic technologies and securing new business partnerships with foreign companies will be his primary undertaking.

While the gambits behind these goals remain to be seen, one element considered in his favor is Lotte's new younger group of directors appointed in the latest reshuffle. The leadership group, according to industry experts, will help the younger Shin hire fresh talent, selecting those who are most qualified for his mission to keep Lotte afloat.

Meanwhile, on Wednesday, Vice President Shin bought Lotte Corp.’s stocks, marking the first time he partially owned the company since his latest promotion. According to the Financial Supervisory Service, Shin bought 4,620 stocks worth over 98 million won. He previously bought 7,541 company stocks for the first time in June, along with an additional 4,255 stocks in September. Now, his share of Lotte Corp. is 0.02 percent.