Lotte has two stores -- the Jamsil branch and the Sogong-dong branch in central Seoul -- whose special license for urban duty-free operation will expire by end of the year. The company is currently competing with other business conglomerates -- Shinsegae, Doosan and SK -- for the lucrative license. The winner is expected to be announced by the end of the month.

With a renewed license, the company expects the Jamsil store to generate 1.5 trillion won ($1.3 billion) in annual sales by 2020, creating 27,000 jobs and attracting 28 million shoppers in the next five years. In order to win the license, the company announced a 1.2 trillion won investment to create a tourism-shopping complex in the area to attract more than 4 million Chinese tourists who visit the adjacent Lotte World amusement park every year.

Lotte Duty Free on Wednesday admitted that losing the license could jeopardize the planned initial public offering of Hotel Lotte, the de facto holding company of the 90 trillion won Lotte Group.

“If we lose the license, the planned listing will be put on hold because 96 percent of Lotte Hotel’s operating profit of 407 billion won in 2014 was generated from the duty-free sales,” said Lee Hong-kyun, president of Lotte Duty Free.

“Even if we list the company, the value would be lower than expected, detrimental to our business. … I haven’t thought about losing,” he told the press.

(baejisook@heraldcorp.com)