Homeplus KINTEX store's butter and dessert section filled with its private brand drinks. [Photo by Jo Jae-hyung]
Homeplus has sold its profitable supermarket division, Homeplus Express, to NS Home Shopping as a desperate measure to escape bankruptcy. However, the company has shuttered 37 stores due to ongoing liquidity issues, unable to wait for the sale proceeds expected in two months. Meanwhile, NS Home Shopping is leveraging this acquisition to establish a nationwide offline presence and expand its omnichannel operations.
According to the retail industry on May 8, Homeplus and NS Home Shopping signed a sales agreement for the Homeplus Express division, approved by the Seoul Bankruptcy Court. Homeplus will receive 120.6 billion won (approximately $91 million) in cash, conditional on the assumption of some debts. While this amount falls short of the anticipated 300 billion won, it provides crucial liquidity for overdue wages and payments to suppliers during its bankruptcy proceedings.
However, Homeplus's liquidity crisis persists, as the sale proceeds will not arrive for two months. After a 100 billion won injection from its major shareholder MBK Partners in March, most of those funds have been depleted. Homeplus must secure operational funds before the July 3 deadline for its rehabilitation plan.
The company announced that the sale alone will not cover the operational funds needed for its rehabilitation process and plans to initiate a "second restructuring" focused on securing additional funds and improving store efficiency.
Homeplus has requested short-term loans, including bridge loans and debtor-in-possession financing, from its largest creditor, Meritz Financial Group, until the sale proceeds are received. However, it has yet to receive a concrete response from Meritz regarding this support.
Meritz currently holds collateral worth 4 trillion won, four times the 1.2 trillion won loan to Homeplus, covering 68 stores. Homeplus stated, "Without financial support from Meritz, which holds all cash-equivalent assets, recovery is impossible." The company has seen significant revenue declines due to stricter trading conditions and reduced deliveries from major suppliers during the rehabilitation process. Although MBK has provided operational funds through personal investments and guarantees, these resources are nearly exhausted due to prolonged rehabilitation and worsening business conditions.
Consequently, Homeplus will temporarily close 37 of its 104 stores from May 10 to July 3, focusing operations on the remaining 67 locations. The strategy includes prioritizing limited product supplies to key stores to minimize revenue loss and customer attrition. Employees at the closed stores will receive 70% of their average wages, with options for reassignment to other locations. In-store rental shops will continue normal operations.
Industry analysts view this move as a critical gamble for Homeplus's recovery. The Homeplus union has expressed urgency, stating, "We must prioritize funding for normalizing product supply, even if it means sacrificing wages." Homeplus plans to submit a revised rehabilitation plan to the court and creditors, outlining strategies for store efficiency and the sale of remaining business segments.
NS Home Shopping Secures Nationwide Offline Distribution Network
In contrast, NS Home Shopping's acquisition of Homeplus Express allows it to expand beyond its TV and mobile-centric business model to establish a nationwide offline distribution network. An NS Home Shopping representative stated, "This agreement will enhance our competitiveness by leveraging our expertise in food and distribution across both online and offline channels."
NS Home Shopping plans to accelerate its food-centric omnichannel strategy by connecting offline stores with online ordering and delivery, utilizing its existing customer base. The company aims to draw TV shopping customers into physical stores while offering online services to in-store visitors.
However, challenges remain post-acquisition. Homeplus Express has experienced key personnel losses and diminished sales capabilities during its lengthy rehabilitation process. Additionally, the strong influence of labor unions may complicate workforce reallocation and organizational stabilization. NS Home Shopping will also face fierce competition from established players like Emart Everyday and GS The Fresh in the SSM market.
An industry insider noted, "This transaction reflects the mutual interests of Homeplus, which needed to sell valuable assets for survival, and NS Home Shopping, which urgently required an offline food distribution network. Homeplus's immediate priority is overcoming its liquidity crisis, while NS Home Shopping must focus on strengthening its food competitiveness through its new offline presence."
* This article has been translated by AI.
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