Homeplus Co. said on the 29th it will submit a revised rehabilitation plan reflecting business structure reorganization and expense reduction effects to the Seoul Bankruptcy Court. With the number of hypermarket stores reduced to focus on core locations and the supermarket division separated and sold, the company plans to pursue both a return to normal operations and mergers and acquisitions (M&A).
The revised rehabilitation plan reflects improvements in business viability. Using profits generated from a return to the black and proceeds from the sale of real estate at closed stores as funding, the company plans to fully repay not only priority claims but also rehabilitation claims.
Homeplus Co. has continued intensive self-rescue efforts since entering rehabilitation on Mar. 4 last year. Its 126 hypermarkets were reorganized around 67 core stores, and it negotiated rent adjustments with landlords. Homeplus Express, the supermarket business, was separated and sold to NS Shopping, an affiliate of Harim Group, simplifying the business structure.
The workforce structure was also significantly adjusted. Through natural attrition and voluntary retirement, headcount was cut by about half, which the company said improved operational efficiency. Homeplus Co. believes that, as confirmed during the supermarket business sale process, once product supply returns to normal, sales can sufficiently recover.
As a result of these self-rescue efforts, various expenses fell by about 1.2 trillion won compared with just before the rehabilitation filing. Homeplus Co. projected that if deliveries and operations at the 67 core hypermarkets normalize, it could immediately generate operating profit in the 80 billion won range. It expected operating profit to increase to around 150 billion won within three years.
Homeplus Co. will also push M&A in parallel, based on its improved revenue structure. With profitability in the hypermarket business improved and the separation and sale of Homeplus Express reducing the burden on potential buyers, the company expects to attract interest from investors considering entry into the domestic retail market.