[why&next] Even 'Relief Pitcher' Yujin Kim Stumbles... What Lies Ahead for Hanssem After Negative Growth

First Negative Growth in Three Years Under Yujin Kim’s Leadership
Exit Strategy Becomes More Challenging Amid Rising Uncertainty
Newly Reorganized Board Faces Task of Enhancing Corporate Value

Hanssem recorded its first negative growth since CEO Yujin Kim took the helm. There is growing criticism that the company’s “squeeze-out” management style—relying heavily on large-scale asset sales and cost-cutting—has reached its limits when it comes to restoring its core business competitiveness. As war and a strong dollar have amplified both domestic and international uncertainties, there is a sense that IMM Private Equity (IMM PE), Hanssem’s largest shareholder, is facing even greater challenges with its exit (investment recovery) strategy.

According to industry sources on April 10, Hanssem’s consolidated revenue last year was KRW 1.7445 trillion, down 8.6% from the previous year. During the same period, operating profit fell by 40.8% to KRW 18.5 billion, and net profit plunged by 69.3% to KRW 46.3 billion.

Yujin Kim, Chief Executive Officer, Hanssem

Hanssem’s crisis intensified after IMM PE acquired management control. In October 2021, IMM PE signed a stock purchase agreement (SPA) to acquire a 27.72% management stake from Honorary Chairman Changgeol Cho and others for KRW 221,000 per share (KRW 1.45 trillion in total). At that time, Hanssem was enjoying the “home furnishing” boom driven by the COVID-19 pandemic and had recaptured KRW 2 trillion in annual sales for the first time in three years. However, a complicated succession vacuum following the founder’s retirement paved the way for IMM PE to take over management rights for the first time in Hanssem’s 51-year history.

To finance the acquisition, IMM PE raised KRW 400 billion through its blind fund “Rose Gold No.4,” while strategic investor Lotte Shopping contributed KRW 260 billion. The remaining funds were secured via acquisition financing. In March 2023, IMM PE injected an additional KRW 100 billion to conduct a tender offer at KRW 55,000 per share, securing an additional 7.7% stake. The total investment amounted to KRW 1.55 trillion.

Hanssem fell into the red in 2022, the first year after the acquisition. The first operating loss in 20 years since its 2002 KOSPI listing triggered the appointment of CEO Kim—then a Vice President at IMM PE—in August 2023. He has served as a “relief pitcher” for troubled IMM PE portfolio companies, having previously led the exit from Hollys F&B and improved the performance of Able C&C.

However, CEO Kim’s strategies have not led to a recovery in Hanssem’s core business competitiveness. Although the company returned to an operating surplus through cost structure improvements and cost reductions, sales have continued to decline year after year. Especially with decreases in revenue, operating profit, and operating margin last year, there is a growing perception among industry and investment circles that his strategy has reached its limit. The company has been criticized for excessive reliance on asset efficiency and cost control measures, such as the sale of its flagship Bangbae store and the liquidation of its China subsidiary.

IMM PE also drew controversy for pushing through high dividend payouts at Hanssem, regardless of business performance. Despite large net losses in 2022 and 2023, Hanssem paid out KRW 13.1 billion and KRW 74.7 billion in dividends, respectively. In the third quarter of 2024, the company executed a quarterly dividend of KRW 102.9 billion based on the KRW 320 billion earned from selling its headquarters building and land in Sangam-dong. The payout ratio for that year reached 93.7%, a stark contrast to 34.5% prior to the acquisition in 2020. Combined with annual rent expenses of around KRW 15 billion for its office building, criticism mounted that IMM PE was focusing more on recouping its investment than reinvesting in Hanssem’s core business. As cash reserves shrank last year, high dividend payouts have come to a halt. As of the after-market closing price on NXT (NextTrade) on April 9, Hanssem’s share price had plummeted to KRW 39,900.

Donghan Sohn, CEO of IMM Private Equity, Taehyun Kim, Managing Director of IMM Private Equity. IMM Holdings

At the regular shareholders’ meeting in March, Hanssem appointed Jaechul Lim, Head of Finance at Lotte Shopping; Donghan Sohn, CEO of IMM Private Equity; and Taehyun Kim, Managing Director at IMM Private Equity, as new outside directors. With the addition of key IMM PE personnel alongside Lim, a “finance expert” replacing Hoseol Lee, Head of Strategic Planning at Lotte Group’s Retail HQ, industry observers believe that enhancing financial soundness and corporate value—rather than pursuing distribution synergies with Lotte—has become the top priority for facilitating an exit.

Hanssem is reportedly reviewing an internal plan to cancel its entire treasury shareholding (29.46%). If all treasury shares are canceled, IMM PE’s stake would exceed 50%. However, analysts point out that unless the company’s core business competitiveness improves, the share price boost from such a cancellation would be limited.

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