Hanshin Rating, Homeplus Short-Term Credit Rating Downgraded... 'A3+→A3'

Korea Credit Rating Agency announced on the 1st that it has downgraded Homeplus's corporate commercial paper and short-term bond credit ratings from A3+ to A3, citing weakened competitiveness and difficulties in performance recovery.

In the related report, KCR stated, "Competitiveness in the large discount store industry has weakened, leading to worsening performance, and financial stability has not improved despite asset sales," explaining the change.

First, it evaluated that "competitiveness within the large discount store market has weakened due to store sales and limited facility investments," adding, "sales per store continue to decline, and the operational gaps caused by store sales restrict the potential for profitability recovery." It also pointed out, "although absolute borrowings have decreased by repaying acquisition financing through asset sales, financial stability has not improved," and "recently, the real estate market downturn has also deteriorated conditions for asset sales."

Korea Enterprise Rating also changed Homeplus's unsecured bond rating outlook from 'stable' to 'negative' for similar reasons, maintaining the credit rating at BBB+.

KER evaluated, "Despite store sales, as of the end of November last year, the debt ratio stood at 696.8%, and dependence on borrowings was 57.4%, indicating a continued heavy financial burden," adding, "operating losses are expanding, and poor performance persists."