Company-wide Voluntary Retirement Implemented
Targeting Employees with Over 15 Years of Service
Reducing Cost Burden Amid Performance Decline
CEO Han Chaeyang: "Heavy Heart... A Step for New Leap"
Emart is conducting its first voluntary retirement program since its establishment in 1993. The company has initiated restructuring amid continued poor performance, including recording an annual operating loss last year.
According to Emart on the 25th, the company posted a company-wide voluntary retirement announcement in the afternoon. This voluntary retirement program targets employees with more than 15 years of service and is conducted across the entire Emart organization, not limited to specific stores.
The eligible candidates for this voluntary retirement are employees in Band 1, 2, and 3 with more than 15 years of service (employees who joined before March 1, 2009, based on the date of joining). In Emart's rank system, Band 1 corresponds to Senior General Manager, Band 2 to General Manager, and Band 3 to Manager level. Applicants for voluntary retirement will receive a special retirement allowance equivalent to 24 months of their monthly salary (more than 40 months of base pay) in addition to the statutory retirement benefits. Additionally, a living support fund of 25 million KRW and career transition support funds ranging from 10 million to 30 million KRW depending on rank will be provided, along with reemployment consulting services.
Earlier this year, Emart accepted voluntary retirement applications from employees working at the Sangbong and Cheonan Pentaport stores ahead of their closures. Although there have been past cases of store closures, employees were generally reassigned to nearby stores. It is interpreted that, amid recent performance deterioration, voluntary retirement was prioritized for employees at stores scheduled to close.
This voluntary retirement program is seen as an effort to reduce management burdens caused by worsening performance. Emart recorded an operating loss of 46.9 billion KRW on a consolidated basis last year. This is the first time Emart has posted an annual operating loss since its spin-off from the Shinsegae Group in 2011. During the same period, net loss reached 185.7 billion KRW, also turning negative. Emart explained that this was influenced by its affiliate Shinsegae Construction's loss of 187.8 billion KRW due to large-scale unsold inventory.
Emart's core business, large discount stores, also experienced poor performance. Emart's separate basis operating profit last year was 188 billion KRW, down 27% from 258.9 billion KRW the previous year. Sales also decreased by 2.1% year-on-year to 16.55 trillion KRW. Emart had set a goal of surpassing 30 trillion KRW in sales last year based on its main large discount store business division but fell short of expectations.
As performance worsened, the company’s credit rating also declined. On the 22nd, NICE Credit Rating downgraded Emart's long-term credit rating from 'AA/Negative' to 'AA-/Stable.' NICE explained the rating adjustment by stating, "The business competitiveness of the offline retail distribution sector is weakening, while the investment results in the e-commerce sector are delayed." They also forecasted, "Due to large-scale investments and a decrease in asset sales, a higher level of financial leverage compared to the past will continue."
Emart plans to provide appropriate compensation and the best support to employees who choose voluntary retirement. Han Chaeyang, Emart’s CEO, said in a CEO message, "We are implementing voluntary retirement with a very heavy heart," and "We earnestly ask for your generous understanding of this measure for a new leap forward."
Meanwhile, as of the end of last year, Emart had 22,744 employees, a decrease of about 1,100 from the previous year (23,844 employees).
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