Homeplus to Close 37 Stores Amid Restructuring Following Express Sale

South Korean retail giant Homeplus is implementing a significant restructuring plan, which includes the temporary closure of 37 of its 104 large-scale supermarkets and the sale of its Express division. This move, set to begin on May 10th and continue until July 3rd, is a direct response to a sharp decline in customer traffic and sales, with many outlets struggling with product shortages. The company's strategy is to concentrate resources on its 67 remaining stores, ensuring adequate product availability to stabilize and recover sales. While the shopping malls within these affected stores will continue to operate normally, the impact on their tenants is expected to be considerable.

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The company is moving to restructure its remaining business divisions, including large-마트, online, and headquarters organizations, after signing a contract to sell Homeplus Express.

Employees at the 37 temporarily closed stores will receive a temporary layoff allowance equivalent to 70% of their average wages. Homeplus plans to reassign employees who wish to continue working to other operational stores. This restructuring follows the recent signing of a sale agreement for the Homeplus Express supermarket division with NS Home Shopping on May 7th, securing 120.6 billion won in cash. However, the company states this amount is insufficient to meet the financial requirements for its rehabilitation plan.

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This is due to product shortages in a considerable number of stores, leading to customer departures and a sales decrease of over 50% compared to the previous year.

Homeplus is in discussions with its primary creditor, Meritz Financial, for short-term bridge loans and DIP loans to cover operational needs until the sale proceeds are transferred. The company has expressed that without financial support from Meritz, which holds its assets as collateral, rehabilitation would be impossible. A revised rehabilitation plan, incorporating measures for operational efficiency, store closures, and potential mergers and acquisitions of remaining business units, is being prepared for submission to the court. The ultimate goal is to improve the business viability of the remaining large-마트, online, and headquarters operations before seeking a third-party buyer to repay outstanding debts and complete the rehabilitation process.

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The company plans to concentrate available products on the remaining 67 stores to prevent sales decline and customer departures from major stores and recover sales.