Homeplus Store Sale Standoff Between Management and Union... CEO Im Ilsun Faces 'Crisis'

Sale of 3 Locations Including Daegu and Ansan
Unions and Politicians Fear Reassignment and Mass Layoffs
Past Conversion of Fixed-Term Contract Workers to Regular Employees
An Icon of Coexistence... A Wise Decision Needed

[Asia Economy Reporter Cha Min-young] Last year, Lim Il-soon, CEO of Homeplus, who practiced 'warm coexistence' by converting all 14,283 non-permanent contract workers into regular employees, is facing the biggest crisis in the fourth year of his term. Although efforts were made to reduce the number of stores to resolve management difficulties, conflicts with the labor union as well as the local community, including Ansan City, remain unresolved.

According to related industries on the 19th, Homeplus is reportedly pushing for the sale of three stores: Daegu branch, Dunsan branch in Daejeon, and Ansan branch amid management difficulties. Sales for last year (March 2019 to February 2020) amounted to 7.3002 trillion KRW, a 4.69% decrease compared to the previous year, and operating profit also recorded 160.2 billion KRW, down 38.39% from the previous year. This is due to the impact of rapid changes within the distribution industry such as reduced competitiveness against online shopping caused by distribution regulations, the rise of e-commerce, and the adverse effects of the novel coronavirus disease (COVID-19). Due to changes in accounting standards, store rental costs have been set as liabilities, resulting in a net loss of 532.2 billion KRW. This is because the proportion of impairment losses on intangible assets and right-of-use assets has increased. It is explained that various management strategies, including asset securitization, have become inevitable for survival and transformation. The sale price of the Ansan branch in Gyeonggi, for which NH Investment & Securities is in charge of the sale, is estimated to be around 200 billion KRW. The successful sale of these three stores is important for the company as well.

The main issue between labor and management is the justification for the sale. The Ansan branch is a large store with an area of about 27,000㎡, employing about 260 directly hired employees and about 300 tenants in leased stores. The labor union has expressed doubts about the inclusion of the Ansan branch, which ranks high in sales, as a sale target. The Daegu branch, the first store, is also said to have symbolic significance that cannot be ignored. A Homeplus official stated, "According to the company's 'All-line' management strategy, stores with low online linkage utilization were prioritized for sale."

Employment stability after the sale is also an issue. In the case of the Ansan branch alone, more than 200 employees need to be relocated, and if they are assigned to stores far away, it is practically equivalent to dismissal. The Ansan City local government and political circles are also pressuring for a full review of the sale, considering regional coexistence.

CEO Lim is making every effort to quell these discordances. He is persuading the labor union and political circles that damage can be minimized through measures such as re-leasing the store after the sale and future reassignment. In addition, he is also considering utilizing existing employees as 'pickers' who shop on behalf of customers in line with the online strengthening strategy. In fact, CEO Lim Il-soon and all executives below have voluntarily decided to return 20% of their salaries for three months starting this month (June) as a measure of shared responsibility. Executives, including the CEO, have been receiving the same salary since the 2017 fiscal year to take responsibility for failing to meet management goals due to poor performance. No performance bonuses have been paid either.

This content was produced with the assistance of AI translation services.