Retailers face leadership changes amid downturn

By Kwak Yeon-soo

Brick-and-mortar retailers are facing major leadership changes as they are struggling to deal with dwindling profits and intensifying competition, according to industry officials Sunday.

Shinsegae Group confirmed that Lee Gap-su, CEO of its affiliate E-mart, will step down after running the company for six years.

His replacement will come from outside the company and is expected to be named in the coming weeks, according to the retailer.

“Lee will be stepping down, but his replacement hasn't been finalized yet,” a Shinsegae Group official said. “However, Lee will still serve as a full-time adviser for the next three years.”

Lee joined Shinsegae Group in 1982 and then moved to E-mart in 1999, where he held key positions in terms of sales, product management and customer service. Since 2014, he has been leading the discount store chain.

Lee reportedly bid farewell to employees, saying “It was an honor to work for Shinsegae for the last 37 years.”

However, the company swung to an operating loss of 29.9 billion won ($24.6 million) in the April-June period, its first quarterly loss since its inception in 1993, under his leadership.

Industry analysts forecast that consolidated sales of the first three quarters would be 11 trillion won, down 2.4 percent from the same period a year ago.

Regarding whether the Shinsegae Department Store head would depart as well, the company official declined to comment.

Lotte Shopping is also likely to make leadership moves, as the Supreme Court upheld a ruling by a lower court that freed Lotte Group Chairman Shin Dong-bin from jail for bribing former President Park Geun-hye.

Although it has not been confirmed yet, there are rumors that Lotte's retail unit CEO Lee Won-joon would depart to reinvigorate the company as it faces a downturn.

His replacement is likely to be Lotte Himart CEO Lee Dong-woo or Lotte Department Store CEO Kang Hee-tae, according to industry sources.

Lotte Shopping's operating profit fell 3.5 percent year-on-year to 296.8 billion won in the first half of this year.