Homeplus speeds up restructuring as no buyers show interest in takeover

A pedestrian walks past a Homeplus Express store in Seoul, Tuesday. Yonhap

Cash-strapped major retail distributor Homeplus is bolstering efforts to restructure its network of offline outlets to streamline its business and save money, as the company’s search to find a new owner has virtually failed.

The retail store chain having 100,000 employees is making last-ditch efforts to avoid the worst-case-scenario of liquidation. Controlled by private equity MBK Partners, Homeplus filed for court receivership with the Seoul Bankruptcy Court last March due to a credit crunch.

According to the company on Wednesday, it decided to close five Homeplus stores in the country by the end of January. The stores are in Siheung and Ansan in Gyeonggi Province, Cheonan in South Chungcheong Province, as well as Incheon and Daegu. The measure follows the shutdown of five other Homeplus stores in Seoul, Busan, Ulsan and the Gyeonggi Province cities of Goyang and Suwon on Sunday.

Downsizing its store network is part of Homeplus’ rehabilitation plan for the receivership filed with the court on Monday. As part of the plan, the company reportedly intends to shut down more than 40 stores nationwide over the next six years.

According to the plan, Homeplus also seeks to sell Homeplus Express, its smaller supermarket (SSM) division that accounts for up to 20 percent of the company's total sales. The supermarket unit operates 295 stores nationwide, about 75 percent of which are located in the capital region encompassing Seoul, Incheon and Gyeonggi Province. The market is valuing Homeplus Express at around 700 billion won ($483.66 million).

Members of the Mart Industry Labor Union Homeplus Chapter and Euljiro Committee of the Democratic Party of Korea demand that Homeplus' owner, MBK Partners, take more responsibilities in rehabilitating the retail chain, during a press conference at the National Assembly in Seoul, Tuesday. Yonhap

The restructuring moves came after MBK Partners’ attempt to sell off Homeplus as a whole effectively failed. Since entering receivership last March, MBK has been seeking to sell Homeplus before the court approves the rehabilitation plan, while extending the deadline for submitting the plan five times. Despite proceeding with open bidding last month, not a single bidder showed interest.

Despite the company’s plan to improve its finances by selling Homeplus Express, the market views the unit as unattractive to potential buyers. Consumer trends increasingly centered on e-commerce have eroded the appeal of brick-and-mortar retail, discouraging distributors from expanding their offline networks.

GS Retail, running the country’s largest SSM chain GS The Fresh, has stopped increasing the brand’s stores after reaching 581 stores nationwide. Lotte Shopping has begun downsizing its own SSM brand Lotte Super, selling off a branch in Yeouido, Seoul, in 2024. Emart, the largest retail supermarket chain company here, also noted that it has no interest in acquiring Homeplus Express.

Homeplus’ plan to sell Homeplus Express has aroused concerns. The labor union, objecting to the plan, said the measure only serves MBK Partners’ goal to increase its profit and exit without providing any sustainable measures for Homeplus employees.

“Homeplus wants to sell its most profitable division and keeps closing down competitive stores nationwide. This is only good for MBK, while the effects of the measures will fall entirely on Homeplus employees, tenant vendors, investors and the local economy around the stores,” the labor union said.