Crisis at Homeplus... Ansan Branch Sale Confirmed

[Asia Economy Reporter Seungjin Lee] Homeplus, which is pushing for store sales after recording a large-scale deficit last year, has confirmed the sale of its Ansan branch.

Homeplus stated on the 19th, "The retail industry as a whole is in a recession, and combined with the adverse effects of the novel coronavirus infection (COVID-19), we have recorded the worst performance ever, placing us in an extremely uncertain business environment. Through this asset securitization, we have increased the visibility of plans to secure liquidity for stable business operations and future business."

Homeplus added, "As a growth business for the future, we plan to implement swift strategic execution and fulfill the management's promise that all employees will move forward together as a 'community of fate.'"

Homeplus plans to make every effort to maintain operations for one year following the asset securitization through the sale of the Ansan branch, so that not only customer shopping convenience but also Ansan branch employees and mall tenants can adapt stably to the changes.

In particular, Homeplus stated that employees working at the Ansan branch will be able to continue working at the current store for the next year, and even after the store closes, the policy of absolute employment retention will remain unchanged. Furthermore, they will conduct transfer placement interviews and other procedures with sufficient time, considering the status of the workplaces where each transfer will take place as well as employees' commuting distances to minimize inconvenience.

Homeplus emphasized, "Transfers to nearby stores, as well as moves to business divisions showing remarkable growth in line with distribution trends such as online business and Homeplus Express (SSM), are also under consideration, and no workforce restructuring is being considered at all."

Additionally, Homeplus stated that although asset securitization was inevitably carried out as a cash procurement measure to overcome the crisis, they will do their best to reflect the positions of mall tenants within the store during the negotiation process after the asset securitization is confirmed.

The lease contracts for mall tenants in the Ansan branch are scheduled to expire at the end of August, but considering this asset securitization, a schedule has been established so that tenants can continue operations for the next year and have sufficient time to consider their future positions.

A Homeplus official said, "Although it is regrettable for both the Ansan branch employees and the company as it is a store with a long history, securing cash resources for the future has become possible. In particular, there will be absolutely no workforce restructuring, and we plan to have sufficient negotiation periods with mall tenants and sincerely discuss compensation procedures."

Meanwhile, Homeplus previously experienced internal strife, including strikes by the labor union after the failure of wage collective bargaining between management and the union. In particular, the investment firm MBK has been selling three stores?Homeplus Ansan, Daegu, and Dunsan branches?and has continuously faced conflicts with the union.

The union strongly criticized, saying, "The Ansan branch is the top store among all stores, and closing such a prime store overnight is a self-destructive act with no justification or benefit."

The union also claimed, "Homeplus going bankrupt and selling off prime stores is all because of MBK. No matter how much we earn to pay off MBK's debt, it's like pouring water into a bottomless pit. Although real estate worth 2.2 trillion won was sold, we are still receiving minimum wage because MBK is paying off its debts."

Homeplus stated that the large-scale deficit recorded last year left them with no choice. For the fiscal year 2019 (March 2019 to February 2020), Homeplus recorded a net loss of 532.2 billion won. Sales and operating profit were 7.3002 trillion won and 160.2 billion won, down 4.9% and 38.3% respectively compared to the previous year.

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