Emart Turns to Deficit... Operating Loss of 46.9 Billion Won Last Year

Shinsegae Construction's Poor Performance Holds Back Growth
Record High Sales of 29.4722 Trillion Won
Gmarket Achieves Q4 Profit Turnaround
"Annual Sales Expected to Reach 30 Trillion Won This Year"

Emart turned to a deficit last year, posting an operating loss of 47 billion KRW due to the poor performance of Shinsegae Construction.

Emart announced on the 14th that its consolidated operating loss for last year was tentatively estimated at 46.9 billion KRW. This marks a turnaround from the previous year's operating profit of 135.7 billion KRW. Sales increased by 0.5% year-on-year to 29.4722 trillion KRW. Net loss also returned to the red at 185.7 billion KRW. The fourth quarter operating loss was 85.5 billion KRW, a reversal from the operating profit of 12.8 billion KRW in the same period last year. Fourth quarter sales and net loss were 7.3561 trillion KRW and 107.1 billion KRW, respectively.

Emart cited the poor performance of Shinsegae Construction as the main factor behind the operating loss. Shinsegae Construction posted an operating loss of 187.8 billion KRW, an increase of 175.7 billion KRW compared to the previous year, due to rising construction costs, sluggish sales performance caused by the real estate market downturn, and the preemptive reflection of expected future losses.

On a standalone basis, Emart's total annual sales were tentatively estimated at 16.55 trillion KRW. Operating profit recorded 188 billion KRW. Fourth quarter total sales and operating profit were 4.0625 trillion KRW and 39.3 billion KRW, respectively. In particular, the warehouse discount store Traders led the sales increase by showing a performance rebound. Traders recorded total sales of 3.66 trillion KRW, a 73% increase compared to last year, through product innovation and new store openings amid a prolonged phase of high inflation and low growth.

Gmarket turned to profitability in the fourth quarter of last year, marking its first profit in eight quarters. Continuous efforts to improve profitability at Gmarket have reduced the deficit each quarter, and the annual operating loss decreased to 32.1 billion KRW, less than half of the previous year's 65.5 billion KRW.

Major offline subsidiaries also maintained solid growth after the endemic phase. Starbucks posted an operating profit of 139.8 billion KRW, up 17.4 billion KRW year-on-year, thanks to continuous new store openings. Shinsegae Food recorded an operating profit of 26.4 billion KRW, up 5.8 billion KRW year-on-year, due to increased demand in the group catering business and improved operational efficiency.

Chosun Hotel & Resort posted an operating profit of 40.3 billion KRW, up 18.1 billion KRW, driven by increased occupancy rates and strong retail business. Shinsegae Property recorded an operating profit of 16 billion KRW, up 12 billion KRW, due to increased visitors to major Starfield stores.

Exterior view of Starfield Suwon, which had its grand opening last month. [Photo by Shinsegae Property]

Emart plans to fully restore its offline core business competitiveness this year by continuing its "unrivaled price leadership" and "maximizing customer experience." The company aims to lead price leadership by operating key products at consistently lowest prices through cost competitiveness and logistics efficiency achieved by integrating the functions of Emart, Emart24, and Emart Everyday. It also plans to create a virtuous cycle synergy of online and offline customer attraction. Additionally, to maximize customer experience, Emart intends to analyze and reflect customer needs without missing any, offering unprecedented services.

Online subsidiaries will focus on profitability improvement efforts to achieve EBITDA profitability. Specifically, SSG.com plans to enhance order rates and productivity by streamlining logistics systems and reorganizing operational zones centered on large PP centers. Gmarket will expand profits through improved full fulfillment operations and strengthened AI advertising services.

An Emart official said, "With the synergy of the offline three companies' function integration becoming full-fledged and the improvement of online business profitability, we expect to achieve a record annual sales of 30 trillion KRW for the first time by the end of this year."