Homeplus to Close 37 Underperforming Stores, Job Security for 3,500 Employees Uncertain

Homeplus, currently undergoing corporate rehabilitation proceedings, has decided to permanently close 37 of its large-format stores that are temporarily suspended from operation. The company also plans to implement a voluntary retirement program for employees at these affected locations. The decision comes after the company announced on May 10th that it would halt operations at 37 underperforming stores out of its 104 large-format outlets.

“

We have decided to close 37 stores that are currently suspended due to low performance.

The closure is expected to impact approximately 3,500 employees. Homeplus has outlined a plan to either reassign staff to nearby stores or offer voluntary retirement packages. For employees in management positions with at least six months of remaining tenure, a voluntary retirement incentive of three months' salary has been proposed. However, the company stressed that these payments are contingent on receiving emergency operating funds (DIP) from creditors, such as Meritz Financial Group, highlighting the severity of its liquidity crisis.

“

The management has unilaterally notified us again of the closure of 37 stores currently suspended and voluntary retirement for employees.

The labor union has strongly opposed the decision, calling the closures and voluntary retirement plan unilateral. The union blames the current management and majority shareholder, MBK Partners, for the situation, alleging that asset sales and inflated rental costs have turned profitable stores into loss-making ones. While acknowledging the need for some store consolidation for normalization, the union criticized the "haphazard closures" for causing mass unemployment and hindering recovery. They are urging the major shareholder to provide guarantees for operating funds and calling for government policy support.

“

These stores with low operating performance are the result of the majority shareholder MBK Partners' 'cash-out' management.

Seoul Rehabilitation Court has extended the deadline for approving Homeplus's rehabilitation plan to July 3rd, pending a review of the sale process for Homeplus Express and subsequent funding plans. Homeplus aims to complete its rehabilitation by selling both its large-format stores and online business. However, securing immediate operating funds remains a challenge. The company's request for bridge loans and emergency operating funds from Meritz, its largest creditor, has been stalled because Meritz is demanding a joint guarantee from the majority shareholder, MBK Partners. Homeplus stated in a notice that selling to a third party with guaranteed financial and management capabilities, similar to the Homeplus Express sale, is the only viable path to rehabilitation.

“

The only way to rehabilitation is to sell to a third party with guaranteed financial and management capabilities, just like Homeplus Express.