[Reporter’s Notebook] Homeplus: Rehabilitation Is Not the Only Answer

Two companies have officially expressed their intention to acquire Homeplus, which is undergoing a pre-court approval M&A process as part of its corporate rehabilitation. However, the market’s response has been cold, as doubts persist regarding the financial soundness and management capabilities of these companies.

The CEO of Harex InfoTech, an artificial intelligence (AI) company participating in the acquisition race, met with reporters on November 4 and only stated, “We will connect everything through AI,” without presenting any concrete vision for the company after the acquisition. The other contender, Snowmad, a real estate leasing and development company, has no experience in the retail industry and posted a net loss last year. As a result, while Homeplus’s corporate rehabilitation is outwardly being promoted as a “revival,” many point out that it is closer to mere survival than true recovery.

Homeplus was once a retail giant with over 140 stores nationwide. However, the spread of e-commerce, changes in consumer behavior, rising rent, and increasing labor costs have led to structural deficits every year. Although its sales volume remains large, operating profit has plummeted, and the temporary securing of cash through the sale of core stores has become virtually the only survival strategy. The key issue is whether the companies entering the acquisition race actually possess the capability and vision to revive Homeplus.

Both companies that have expressed their intention to acquire Homeplus lack clear experience in the retail sector, and their financial structures have deteriorated in recent years. Industry analysts say, “The acquisition of Homeplus is more likely a speculative move to secure real estate assets than an opportunity for new growth.” There is a high risk that, under the pretense of rehabilitation, only key assets will be stripped, resulting in what is known as a “zombie-style rehabilitation.”

The bigger problem is the structural stagnation of the industry itself. For Homeplus to truly recover, it needs more than simple cost-cutting or store renovations; a completely new digital transformation model is required. However, it is questionable whether the potential buyers have the capacity for such investment and the determination for innovation. If they merely take on more debt and expand in size, the rehabilitation process will amount to nothing more than a stopgap measure to buy time.

The corporate rehabilitation system is designed to help companies with potential overcome temporary crises. However, Homeplus’s crisis is not a short-term liquidity problem but rather the collapse of its structural profitability. If the acquiring companies fail to present any new vision and merely try to survive through restructuring and asset sales, this is not rehabilitation but mere prolongation. Rehabilitation for its own sake will only result in greater social costs in the end.

The government and creditors must also remain objective. As the acquisition candidates fail to meet market expectations, politicians are once again floating the idea of “Nonghyup’s role.” However, as of August this year, Nonghyup Distribution posted a deficit of 15.1 billion won. If this continues, it will mark the fourth consecutive year of losses. This is largely due to a failure to respond swiftly to changes in the industrial structure.

The number of direct and indirect jobs related to Homeplus is estimated at 100,000. However, if a buyer lacking the potential for structural innovation acquires Homeplus, it is likely that only short-term employment will be maintained. If inefficient rehabilitation is prolonged for the sake of local economic interests, it will only delay the transformation of the entire industry. In fact, encouraging the movement of capital and labor into more productive sectors through liquidation or partial sales may yield greater social efficiency.

What is needed now is not the courage to “save” but to “restructure.” Rehabilitation that ignores market realities and the direction of the industry will ultimately bring losses to consumers, workers, and the national economy alike. Rehabilitation is not the only answer. Sometimes, an orderly liquidation can serve as a new beginning for the next era.

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