Emart Achieves Record High Sales Last Year... Profitability Falters Due to 'Seubuk Carry Bag' (Comprehensive)

Last Year's Annual Sales of 29.3335 Trillion Won... Expected to Surpass 30 Trillion This Year
Operating Profit Down 54.2% to 145.1 Billion Won... Impact of Starbucks Carryback Refund

Emart continued its record-breaking annual sales based on balanced growth among its online and offline affiliates. However, operating profit declined due to one-time costs from Starbucks carryback refunds, amortization and profit and loss recognition related to the acquisitions of Starbucks and Gmarket, and profitability deterioration caused by high exchange rates.

Emart announced on the 14th through a disclosure that its consolidated sales in the fourth quarter of last year reached 7.4753 trillion KRW, a 9.0% increase compared to the same period last year. Annual sales rose 17.7% to 29.3335 trillion KRW due to the acquisitions of Gmarket and SCK Company.

Consolidated operating profit for the fourth quarter was 22.3 billion KRW, down 55 billion KRW, and annual operating profit was 145.1 billion KRW, down 171.7 billion KRW. The main reasons for the decline in operating profit were the one-time costs from Starbucks carryback refunds, profitability deterioration due to record-high exchange rates, and amortization and profit and loss recognition related to the acquisitions of Starbucks and Gmarket.

On a separate basis, total sales in the fourth quarter grew 4.0% to 4.1859 trillion KRW, and annual sales increased 2.7% to 16.902 trillion KRW. Fourth-quarter operating profit rose 39.1 billion KRW to 81.3 billion KRW, while annual operating profit decreased 7 billion KRW to 258.9 billion KRW.

Strong performances in the discount stores driven by the SSG Sale in November and year-end events in December, along with improved profitability in specialty stores centered on No Brand, led to a significant increase in fourth-quarter operating profit. In particular, existing discount stores grew 7.8% in the fourth quarter, extending growth for ten consecutive quarters. The number of customers in the fourth quarter also increased 4.3% year-on-year, marking growth for two consecutive quarters.

Online subsidiaries improved profitability, with Emart24 and Chosun Hotel achieving annual profits, raising expectations. SSG.com’s fourth-quarter net sales grew 8.3% to 455.9 billion KRW, and operating loss improved by 18.3 billion KRW year-on-year to -21.9 billion KRW. Thanks to strengthened grocery competitiveness and advanced logistics systems, losses were significantly reduced for two consecutive quarters.

Gmarket’s fourth-quarter operating loss was -13 billion KRW, down 1.9 billion KRW from the previous quarter, continuing to narrow losses for two consecutive quarters. W Concept’s fourth-quarter GMV increased 28% year-on-year to 155.3 billion KRW, recording an annual profit of 3.2 billion KRW.

Starbucks’ fourth-quarter operating profit was 19.4 billion KRW, down 38.1 billion KRW year-on-year. This was due to one-time costs related to the carryback recall and increased costs of raw materials such as coffee beans caused by record-high exchange rates.

Emart24’s fourth-quarter operating loss was -2.9 billion KRW, improving by 600 million KRW year-on-year, and it turned to an annual profit of 6.8 billion KRW, up 10.3 billion KRW from the previous year, marking its first-ever annual profit. The number of stores increased by 76 from the previous quarter, totaling 6,365 stores.

Chosun Hotel & Resort recorded an operating profit of 14.7 billion KRW in the fourth quarter, improving by 18.4 billion KRW year-on-year due to improved occupancy rates amid the with-COVID-19 era. Despite the COVID-19 period, aggressive investments expanded its scale, resulting in an annual operating profit of 22.2 billion KRW, up 71.5 billion KRW, turning profitable for the first time in nine years since 2013.

Emart expects to continue its sales growth this year and surpass 30 trillion KRW. Through its disclosure, Emart projected this year’s sales to increase 6.7% from last year to 31.29 trillion KRW.

Emart plans to pursue “profitability-centered management for sustainable growth” this year, aiming for balanced growth between offline and online businesses. Offline will secure a foundation for future growth through cost structure innovation, strengthening products and core competitiveness, and improving investment efficiency. Online will strengthen expertise suitable for each business sector through portfolio restructuring to secure essential competitiveness by business model.

An Emart official said, “Despite a challenging environment last year due to high exchange rates and high interest rates, we maintained balanced growth,” adding, “This year, we will continue sustainable growth that can further secure profitability.”