Shinsegae Duty Free, First Voluntary Retirement Since Establishment... Executives Return 20% of Salary

High-Intensity Cost Reduction Measures Due to Poor Performance

Shinsegae Duty Free, experiencing poor performance, has launched high-intensity cost-cutting measures such as voluntary retirement and executive salary returns.

According to the duty-free industry on the 15th, Shinsegae DF, which operates Shinsegae Duty Free, announced on the company bulletin board that it will accept applications for voluntary retirement from today until the 29th. The target is employees with more than 5 years of service. Those with less than 10 years of service will receive 24 months' worth of base salary, and those with more than 10 years will receive 36 months' worth. In addition, a job transition support payment equivalent to next month's salary will be provided.

Incheon International Airport Terminal 1 Shinsegae Duty Free Complex Fashion Store Exterior. Provided by Shinsegae DF

This is the first time since its founding in 2015 that Shinsegae DF is implementing a voluntary retirement program. A Shinsegae DF official explained, "In difficult conditions such as the COVID-19 pandemic, China's economic slowdown, high exchange rates, and changes in consumer trends, this is to improve management structure and increase efficiency to create momentum for sustainable growth."

Along with this, 7 to 8 executives, including CEO Yoo Shin-yeol, have decided to return 20% of their salaries starting this month. The duration is not fixed. This is the second time executives have returned salaries since the outbreak of COVID-19 in 2020. It is seen as a symbolic measure where management shares the pain of cost reduction.

Earlier, Shinsegae DF established an 'Emergency Management Task Force' (TF) directly under CEO Yoo last month to review structural reform plans for profitability improvement. Along with the voluntary retirement announcement, CEO Yoo posted on the company bulletin board, saying, "We inevitably had to consider workforce reduction to become an efficient organization suited to changes in the business structure, and with a heavy heart, we are implementing voluntary retirement for the first time since the company's founding. Through painstaking efforts, we will overcome the current difficult environment and create an opportunity for a new leap forward."

As the domestic duty-free business suffers severe stagnation, Shinsegae Duty Free's performance has also deteriorated. In the third quarter of this year, operating losses reached 16.2 billion KRW, turning to a deficit. Operating profit decreased by 29.5 billion KRW compared to the same period last year. The cumulative operating profit from the first to third quarter turned from a 77.8 billion KRW surplus last year to a 400 million KRW deficit this year. The main causes are changes in consumer trends and the strong dollar leading domestic and foreign customers to visit duty-free shops less than before, while store rental costs, calculated based on the number of passengers at Incheon International Airport, have ballooned like a snowball.