Homeplus faces bankruptcy, E-mart poised for gains amid retail sector slump

Homeplus is set to proceed with bankruptcy procedures after its corporate rehabilitation process was canceled. The company missed a court-ordered deadline to secure 200 billion won in short-term operating funds, a move that could lead to significant market shifts.

Even if the closure decision is reversed, analysts at NICE Investors Service predict that competitors, especially E-mart, will see substantial gains. Homeplus's market position is expected to weaken regardless of the outcome of the rehabilitation process. The company's 67 stores, which were initially slated to continue operations, reportedly showed better performance than those already closed. If these stores also shut down, the competitive advantage for rivals will grow.

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Even if the decision to cancel the corporate rehabilitation process is reversed, Homeplus's market position will weaken, and other large mart businesses will continue to see indirect profits.

NICE Investors Service noted that E-mart and Lotte Mart have already seen improved performance due to Homeplus's operational disruptions. They anticipate E-mart will benefit more than Lotte Mart from any further closures, citing E-mart's larger presence in the Seoul metropolitan area, where a significant number of Homeplus's remaining stores are located.

However, the broader large-mart sector is facing a downturn. National data shows a projected 1.9% decrease in retail sales for large marts in 2025 compared to 2024, with a 6.3% drop in the first five months of 2025 compared to the same period last year. This contraction is expected to accelerate, suggesting that the competitive landscape for large discount stores is gradually weakening.

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The indirect profits from the additional closure of Homeplus's 67 stores will be greater for E-mart than for Lotte Mart.