Lotte Homeshopping, the TV channel of South Korean retail giant Lotte, initiated its first voluntary redundancy program amid spluttering financial performance, according to a company official on Friday.

From Thursday to Wednesday, the company will allow employees aged 45 or older who have worked for Lotte Homeshopping for five years or more to apply for the program.

The employees who voluntarily resign will be compensated with about two years' annual salary, along with reemployment support and tuition support for their children.

The payment date and duration of support are yet to be decided, according to the company official.

Lotte Homeshopping’s first initiation of a voluntary redundancy program is largely interpreted as part of its efforts to cut costs, following its recent lackluster financial results.

"In order to flexibly respond to environmental changes at a time when the retail or media industry is going through a rapid change, we initiated a voluntary redundancy program as part of an organizational change, in a bid to actualize management innovation,” the Lotte Homeshopping official said.

Lotte Homeshopping’s quarterly sales and operating profits for the April-June period recorded 231 billion won ($173 million) and 2.1 billion won, respectively, down 15.2 percent and 92.8 percent compared to the same period last year. In the first quarter, the firm logged 231 billion in sales and 4 billion won in operating profits, recording an on-year decrease of 16 percent and 87 percent, respectively.

The poor business showings come following the Ministry of Science and ICT's decision in 2022 to have Lotte Homeshopping’s broadcast suspended for six hours every day for six months, from February to August in 2023.

The decision came upon revelations that Lotte Homeshopping deliberately omitted executives' and employees' criminal activities such as embezzlement in its regular application form filed to the ICT Ministry to have its broadcasting schedules approved.

The overall increase in the broadcast transmission fee, which refers to the money that home shopping companies pay to broadcasting companies in return for using their TV channels, is cited as another factor in Lotte Homeshopping’s decrease in profits.

According to the Korea Communications Commission’s data, in 2022 the transmission fee paid by seven home shopping companies and five T-commerce companies to broadcasting operators logged 2.4 trillion won, up 7.4 percent from 2021. T-commerce companies refer to companies that operate shopping sessions on smart TVs to have customers purchase items.