Homeplus is facing a critical juncture just over a month after receiving court approval for its rehabilitation plan. The company resumed operations with 200 billion won in emergency operating funds but has fallen short of sales recovery expectations. Compounded by product supply issues and the exit of some leased stores, the normalization of operations has become a key factor in the upcoming mergers and acquisitions (M&A).
According to the retail industry on October 15, Homeplus's sales during the holiday period from October 3 to 5 reached only about 30% of its targets. This is a decline from a 40% achievement rate in mid-September. External payment data also indicates limited recovery. According to the mobile index from IGAWorks, the estimated average weekly credit and debit card payments for Homeplus from the second week of September to the first week of October was about 18 billion won, a 7.5% decrease from the average of 19.5 billion won in the first four weeks of June before the suspension of operations.
In contrast, during the same period, estimated average card payments for E-Mart increased from 172.5 billion won to 229.3 billion won, a rise of 32.9%, while Lotte Mart saw an increase from 62.3 billion won to 81.5 billion won, up 30.7%. Homeplus's estimated payments peaked at 34.9 billion won in the week immediately following the resumption of operations on August 13 but dropped to 19.5 billion won the following week. Subsequent weeks saw further declines, with payments at 22 billion won in the third week of September, 18.4 billion won in the fourth week, and 17.8 billion won from September 28 to October 4.
The challenge now lies in normalizing deliveries. Homeplus CEO Jo Joo-yeon stated during a National Assembly audit on October 12, "We had planned to increase inventory and sales through credit transactions, but the reality is that only prepayments and cash transactions are possible. The situation is very limited for increasing sales." The withdrawal of some large leased stores, such as Olive Young and Daiso, has added to the pressure to recover both product variety and customer traffic.
To address these challenges, Homeplus is running a special promotion for members from today until October 21, offering up to 50% off on all Hanwoo beef products. Since October 7, the company has also been accepting applications for voluntary retirement from all employees, aiming to balance sales growth with cost reduction. Initially set to close applications on October 22, the deadline was moved up to October 14 due to a surge in applicants amid concerns over management normalization.
Ultimately, Homeplus is pinning its hopes on the M&A process. The company is pursuing a sale that bundles its headquarters, online business, and 67 hypermarkets. CEO Jo noted, "We are set to receive letters of intent by the end of October, and expediting the M&A process to quickly repay all debts is the best approach." However, delays in normalizing operations could increase the burden on potential buyers, as they would need to invest not only in the purchase price but also in restoring the supply chain, additional working capital, and enhancing store competitiveness. An industry insider remarked, "From the perspective of potential buyers, they must consider not only the value of the stores and real estate but also the current operational capacity and the additional normalization costs required. The key variables will be whether actual buyers emerge by the end of the month and how much sales and product supply can recover before then."
* This article has been translated by AI.
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