As major domestic large marts prepare for year-end large-scale discount events, Homeplus, which is undergoing corporate rehabilitation proceedings, faces the risk of missing its last chance at a peak sales season to secure its survival. This is due to difficulties in securing products caused by sluggish sales and financial constraints. It appears difficult to find an appropriate solution other than M&A (mergers and acquisitions).
According to industry sources on Tuesday, Homeplus has not finalized plans for additional large-scale discount events following its special price sale running until Wednesday to mark the Hangul Day holiday.
Considering that it typically takes anywhere from one month to three months for large marts to prepare major discount events, there is a high likelihood of disruptions in preparations for fourth-quarter promotions as well. The sustainability of flyer-based promotions, which require relatively shorter preparation periods, also remains uncertain.
The biggest factor is the financial crunch. Homeplus resumed operations based on 20 billion won in emergency operating funds (DIP), but its financial situation has worsened as sales have not recovered to expected levels. It was reported that Homeplus's sales in early this month amounted to only about 30% of its target.
Difficulties in product procurement have also increased. Initially, Homeplus planned to increase inventory and expand sales through credit transactions, but it is currently receiving products primarily through prepayment and cash transactions. Typically, distribution companies, including large marts, receive products through credit transactions such as sales-secured bonds.
The prevailing view is that Homeplus lost market trust after failing to pay over 500 billion won in commercial debt just before entering corporate rehabilitation proceedings. If the credit transaction structure is not restored, distribution companies need cash every time they secure products, making it difficult to receive adequate quantities on time and slowing sales recovery. This is also why shelves at major Homeplus stores were empty or stocked only with low-priced PB (private brand) items just before operations were suspended.
Consequently, the company is struggling to respond in the fourth quarter as well. The fourth quarter is a peak season for the distribution industry, seeing concentrated shopping demand from Black Friday, Singles' Day, and year-end holidays.
Large marts launch large-scale discount events during this period to secure customers. Competitors E-Mart and Lotte Mart have begun preparing their fourth-quarter discount events centered on "Goraet Festa" and "Tongkeun Day," respectively. Previously, Homeplus failed to enjoy the holiday special season due to difficulties in securing gift sets for the Chuseok (Mid-Autumn Festival) period.
Additional DIP funding is also not easy. Meritz Financial Group, the largest creditor, has stated that additional DIP support is impossible. MBK Partners also appears reluctant to inject further funds, having effectively relinquished its status as the largest shareholder through measures such as the cancellation of shares worth 2.5 trillion won last month, and having supported operating costs through personal guarantees by MBK Chairman Kim Byung-ju. It was also reported that Kim Gwang-il, MBK Vice Chairman who served as Homeplus co-CEO, recently expressed his intention to resign.
Homeplus CEO Cho Ju-yeon said at the National Assembly's Political Affairs Committee national audit on Monday, "Ultimately, M&A (mergers and acquisitions) must proceed for the current situation to be resolved."
Observations suggest that if Homeplus's M&A fails, the company will effectively follow a liquidation procedure through measures such as the partial sale of stores. If mass unemployment materializes in this process, there is a possibility that the issue could become a political controversy again.
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