Emart Returns to Profit After 3 Years... Largest Renovation in History Scheduled for Second Half

Q2 Operating Profit 7.6 Billion KRW
16 Stores Renovated in Second Half
Expansion of Food-Focused Stores and Large PP Centers

[Asia Economy Reporter Lim Chun-han] Emart has succeeded in turning a profit in the second quarter for the first time in three years. This was thanks to increased food sales and strong performance from warehouse-style discount stores like Traders. Emart is making a bold move in the second half of the year with the largest store renovations in its history.

According to Emart on the 13th, consolidated operating profit for the second quarter of this year was preliminarily estimated at 7.6 billion KRW, turning profitable compared to an operating loss of 47.4 billion KRW in the same period last year. This is the first profit in three years since the second quarter of 2018, when it recorded 53.3 billion KRW. In the second quarter of 2019, it posted an operating loss of 29.9 billion KRW, marking its first quarterly deficit. Sales increased by 13% year-on-year to 5.8647 trillion KRW. Net profit rose 53.6% to 483 billion KRW.

On a separate basis, discount store sales increased 9.6% to 3.894 trillion KRW, and operating profit rose by 20.8 billion KRW to 5.8 billion KRW. In particular, discount stores expanded their growth rate for five consecutive quarters, thanks to a strengthened food strategy. Looking at the second quarter’s category-wise performance, food sales increased by 15.7%. Traders’ sales reached 800.5 billion KRW, and operating profit was 26.6 billion KRW, up 21% and 61.2%, respectively. SSG.com’s sales increased 12.1% to 349.5 billion KRW. Operating losses widened to 26.5 billion KRW from a loss of 13.7 billion KRW in the same period last year. The total transaction amount in the second quarter was 1.3188 trillion KRW.

Emart’s core strategies focus on food and logistics. Following renovations at Byeollae, Seogwipo, and Guro stores in the first half, Emart plans to renovate 16 stores in the second half. The key is a store layout centered on food. Discount stores will open in urban grocery-focused locations such as Jeonju Eco City, and Traders plans to open five additional stores by 2025.

The existing PP centers within Emart stores will be converted into large-scale PP centers to enhance delivery capabilities. PP centers are spaces within Emart stores where employees pick, pack, and prepare customers’ orders. Emart currently operates over 110 PP centers and plans to expand the size of 13 of them. The logistics capacity of SSG.com’s logistics center, 'Neo,' will also be further increased.

In the overseas business sector, Emart is expanding local operations through a strategic partnership with a Vietnamese company. Emart sold 100% of its stake in Emart Vietnam to the Vietnamese company TACO and will convert local operations into a franchise model. Emart opened its first store in Ho Chi Minh City’s Go Vap district in 2015 but faced difficulties in opening additional stores due to licensing and other issues. Through this partnership, Emart expects to open more than 10 additional stores by 2025.