Homeplus' recovery falters as sales slump, buyer search stalls

Homeplus, which narrowly avoided liquidation and resumed operations in August, is struggling to regain its footing as weak sales and stalled takeover efforts cloud its recovery, according to industry officials Monday. The uncertainty has also prompted a wave of voluntary resignations among employees.

A major supermarket chain, Homeplus is currently undergoing court-led rehabilitation after struggling for years with the decline of the country’s hypermarket sector and consumers’ shift to online shopping.

In July, the Seoul Bankruptcy Court briefly terminated the proceedings after the embattled retailer failed to secure the minimum 200 billion won ($150 million) in fresh funding needed to carry out its restructuring plan. Homeplus reversed that outcome only after obtaining emergency financing from Meritz Financial Group, its largest creditor, at the last minute.

The retailer reopened all 67 of its remaining stores nationwide on Aug. 13, hoping to put its recovery back on track. Sales reached 10.63 billion won on the first day, followed by a daily average of 8.7 billion won over the next five days, suggesting an initial rebound.

But that momentum soon faded. By early October, sales had fallen to just about 30 percent of the company’s internal expectations. Daily sales were only in the 3 billion won range over the Oct. 3-5 holiday period.

Disruptions to merchandise supplies have been a major factor behind the decline. Hypermarkets typically receive goods on credit and pay for them later. But mounting unpaid invoices have led suppliers to withdraw those terms, forcing Homeplus to pay upfront before it can stock its shelves.

At a parliamentary audit on Oct. 12, Homeplus CEO Joh Ju-yeon said the company “was now limited to advance payments and cash transactions.”

Sparse shelves and limited inventory, in turn, give shoppers fewer reasons to return, further depressing sales and worsening the retailer’s cash shortage.

A sale of the business, seen as one possible route out of the crisis, also remains uncertain. Homeplus is pursuing a full-business sale that would bundle its headquarters, online operations and all 67 stores. It plans to accept letters of intent through the end of this month, but no potential buyer has emerged as a serious contender.

Hyundai Department Store Group and GS Retail have been mentioned as possible candidates, but both have denied reports that they are considering a bid.

If no buyer comes forward for the business as a whole, Homeplus could instead sell individual stores and other assets, particularly profitable locations and properties with high redevelopment value. But such a piecemeal sale would raise the risk of large-scale job losses.

The uncertainty has already prompted a surge in applications for voluntary retirement. The retailer had originally planned to accept applications through Oct. 22 but closed the program early last Wednesday after demand exceeded expectations. The rush came despite the absence of any additional severance payments or incentives that are typically offered alongside statutory severance pay and outstanding wages.

Although the company did not disclose the official number of applicants, its labor union estimates that 400 to 500 employees applied — equivalent to roughly 4 to 5 percent of the workforce.