Lotte Duty Free, South Korea's top duty-free operator, said Tuesday it has pulled out of an airport in the capital city of Indonesia last month, after an unsuccessful bid to extend the contract.

Lotte's duty-free store in Jakarta International Airport closed Monday after its contract expired, the company said. Opened in January 2012, it was the firm's first overseas store. The closure comes at a time when local duty-free stores are struggling to cope with the diplomatic row between Seoul and Beijing that have impacted sales.

"We took part in the tender after our contract expired, but a local company won the bid," a Lotte official said. "We will focus on our other foreign stores, including the one in downtown Jakarta, and continue to push for overseas expansion." 

Lotte currently operates six duty-free stores abroad including ones in Japan, Vietnam and Thailand.

South Korean duty-free operators, meanwhile, are taking the brunt of a steep drop in the number of tourists after Beijing banned the country's travel agencies from selling Korea-bound package tours beginning mid-March in apparent retaliation over the deployment of a US missile defense system here.

The number of Chinese tourists in South Korea more than halved last month on-year, marking a decline for four straight months. (Yonhap)