The retailer’s fixed asset turnover ratio dropped to 0.96 as of Feb. 29, 2024, falling below the critical 1.0 threshold, according to industry sources citing the latest sales results. The figure indicates that Homeplus is struggling to generate sales proportionate to its asset base.
The metric has been in steady decline since MBK Partners acquired Homeplus eight years ago.
In February 2017, the ratio stood at 1.13, but it plunged to 0.73 in 2020 during the COVID-19 pandemic and has yet to recover to pre-pandemic levels.
By contrast, market leader E-Mart maintained a robust 1.97 ratio as of December 2023, underscoring Homeplus’ underperformance in South Korea’s highly competitive retail sector.
Analysts attribute the downturn to Homeplus’ sluggish response to the e-commerce boom and the sell-off of high-performing store locations, which has weakened its competitive standing.
“We’ve been running encore sales events since launching our promotions in 2023,” a Homeplus spokesman said, dismissing speculation that the extended discounts are linked to the company’s ongoing financial struggles.
However, market observers widely interpret the two-phase discount extension as a desperate attempt to bolster cash reserves amid concerns over unpaid commercial credit obligations.
The retailer’s declining asset utilization has also complicated MBK Partners’ attempts to divest parts of the business. Efforts to sell the relatively profitable supermarket division have stalled, with no suitable buyers emerging since last year.
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