E-Land Retail confirmed on the 21st that it is considering closing the NewCore Incheon Nonhyeon branch. This comes 15 years after the company opened the store in June 2010 as outlet No. 31.
According to the retail industry, E-Land Retail recently informed the tenants at the NewCore Incheon Nonhyeon branch that it will close the store in June. E-Land Retail had been leasing the 1st to 3rd floors of Prugio City in Nonhyeon-dong, Incheon (with a business area of 7,600㎡), but it is reported that the company has decided not to renew the lease and will cease operations.
The store is located near Incheon Nonhyeon Station on the Suin-Bundang Line and has a catchment area of 32,000 households within a 3 km radius, including the Nonhyeon and Hanwha districts. However, it has reportedly experienced sluggishness due to recent economic downturns and a shift to online consumption. E-Land Retail operates a total of 43 offline stores under brands such as NC Department Store, NewCore, 2001 Outlet, and Dong-A.
Industry analysts suggest that E-Land Retail, which has been struggling with poor performance, intends to close underperforming stores whose lease agreements are expiring. Last year, E-Land Retail reported a consolidated revenue of 1.5649 trillion won, a decrease of 0.4% compared to the previous year. During the same period, its operating profit fell by 42% to 30 billion won. The net loss widened to 167.9 billion won compared to the previous year. Financial burdens also increased. As of the end of last year, E-Land Retail's cash assets were 76.5 billion won, significantly lower than its total borrowings of 1.9371 trillion won.
In relation to this, Korea Ratings downgraded E-Land Retail's corporate credit rating last December. It had been stable at BBB+ as of 2023, but was lowered to a negative outlook in June of the previous year, then to BBB (stable) in December. Around the same time, NICE Investors Service also downgraded E-Land Retail's credit rating from 'BBB+ (stable)' to 'BBB+ (negative).
Hanwha Ratings identified key reasons for the downgrade of E-Land Retail's credit rating as the polarization of consumption and weakened business competitiveness due to the spread of online shopping, as well as excessive financial burden due to ongoing capital expenditures. It is analyzed that there is an added investment burden of about 100 billion won due to the construction of the Magok R&D center and support for affiliates while overall growth has stagnated.
Some interpret this as a step towards store closures due to the 'polarization phenomenon' in the retail industry, which is being reshaped around super-large department stores and outlets. Previously, Lotte Department Store's Masan branch and NC Department Store's Seomyeon branch closed last year, and the Grand Department Store's Ilsan branch shut down in February this year. In June, the Hyundai Department Store at D-Cube City in Guro District, Seoul, is also set to close.
However, E-Land Retail maintains that it is 'under review' regarding the closure of the NewCore Incheon Nonhyeon branch. An E-Land Retail official stated, 'We are discussing terms regarding whether to continue the lease or cease operations,' adding, 'The results will likely be announced by the end of this month.'
Recently, E-Land Retail has been expanding its business with new offerings such as 'NC Fix,' an off-price store (a store selling leftover products at ultra-low prices), and 'Kim's Convenience Store,' a hybrid format between convenience stores and corporate supermarkets (SSM). However, Kim's Convenience Store, which is registered as a convenience store, is effectively withdrawing its franchise business after the Ministry of Trade, Industry and Energy issued administrative guidance indicating it is closer to an SSM.
In response, E-Land aims to improve its revenue through 'selection and concentration,' focusing on opening NC Fix outlets and expanding partnership menu items with Ashley within Kim's Club.