Renewal as a Store Specialized for Single-Person Households
Sequential Progress Focused on the Capital Region
Strategy Explained for Profitability Improvement
Mixed Views on Accelerated Sale Moves
Homeplus is set to improve profitability through the renewal of its corporate supermarket (SSM) following the launch of the food specialty store 'Mega Food Market.' This strategy is seen as an effort to overcome poor performance by re-targeting neighborhood commercial districts with fresh food as the main attraction.
According to industry sources on the 6th, Homeplus plans to sequentially renovate its Express stores into specialty stores tailored for single-person households starting in May. After the Express Hakdong Station store, which was remodeled as a single-person household specialty store in November last year, recorded an average double-digit sales growth rate over 12 weeks since its opening, the company intends to expand stores with the same concept.
Exterior view of Homeplus Corporate Supermarket (SSM) Express Siheung Baegot Branch. [Photo by Homeplus]
The Express renewal work will be carried out on directly managed stores in the metropolitan area. Internally, the selection of stores subject to renewal has already been completed. Homeplus operates a total of 235 Express stores in the metropolitan area, of which about 200 are estimated to be directly managed stores rather than franchises. A Homeplus official said, "The renewal work will be carried out sequentially, focusing on urban-type stores."
The Express renewal is interpreted as a measure to improve profitability. Since being acquired by MBK Partners, the leading private equity firm in Korea, Homeplus's sales have been on a downward trend. Sales have declined for four consecutive years since 2018, and the company has posted operating losses since 2021. According to the fiscal year 2022 (March 2022 to February 2023), sales increased by 1.6% year-on-year to 6.6006 trillion KRW, but operating losses widened to 260.2 billion KRW.
In response, Homeplus launched a major renewal early last year, spearheaded by the food specialty store 'Mega Food Market,' to initiate a turnaround. Starting with the Incheon Ganseok store in February 2022, the Mega Food Market expanded to 24 stores, with sales per store increasing by up to 95% as of November last year. Additionally, with the increase in 1-2 person households leading to more local shopping and small-quantity food purchases, the company is interpreted to be aiming to secure additional growth momentum through the renewal of SSM stores.
Some speculate that this is a prelude to MBK Partners' full-scale sale of Homeplus. The strategy is to put performance back on track before the sale. The recent appointment of Kim Kwang-il, MBK Partners' Vice Chairman, as CEO through personnel changes at Homeplus is also seen in this context. This is the first time since MBK Partners acquired management rights of Homeplus that a private equity executive has taken a leading role in management. Industry insiders widely view this as a signal for the sale process. The redemption deadline for investors in MBK Fund No. 3, which invested in Homeplus, is October 2025, with a possible two-year extension by agreement.
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