Homeplus Faces One Month Since Credit Downgrade
Dairy and Instant Noodle Supply Disruptions Seen at Some Stores
Risk of Delivery Suspension Recurring if February Settlement Funds Are Delayed
Distrust and Backlash Grow Despite Promise to Repay Securitized Payables
On the morning of the 27th at a Homeplus store in Seoul. Although it was the first day of the discount event 'Founding Homeplun Support Customer Appreciation Festival' running until the 2nd of next month, there were not many shoppers. This contrasted with some stores experiencing 'open run' phenomena as competitor Lotte Mart launched its 27th anniversary grocery shopping festival 'Thank You Day' on the same day, offering major popular food items at special prices for one day.
Milk display at a Homeplus store in Seoul on the 27th. Seoul Milk Cooperative has stopped deliveries for over a week, causing their products to disappear, and Homeplus private brand (PB) milk is prominently displayed. Photo by Kim Heung-soon
The impact of disagreements over deliveries was clearly visible as some partner company products were not supplied on the shelves. Notably, Seoul Milk Cooperative had stopped deliveries for over a week since the 19th, and milk bearing its logo was completely absent. Only previously secured sterilized milk, cheese, and whipping cream dairy products were occasionally seen.
Due to insufficient stock caused by payment issues, Homeplus's private brand (PB) products dominated the milk shelves more than established brands. Popular items such as cup noodles and Shine Muscat grapes also showed sparse displays across related shelves. A store employee explained, "It's not that there is no stock at all, but it seems they are bringing in less quantity than before," adding, "There may be a time lag in restocking after sales, which can make demand appear insufficient." However, the situation was not much different at the nearby corporate supermarket (SSM) Homeplus Express.
On the 27th, a cup noodle display at a Homeplus store in Seoul. Some manufacturers' products have sold out, and additional stock has not been displayed, leaving empty spaces here and there. Photo by Kim Heung-soon
The 28th marks one month since the credit rating downgrade by a credit rating agency, which triggered Homeplus's application for corporate rehabilitation procedures. Homeplus has stated its intention to sequentially pay trade receivables such as partner company delivery payments, tenant settlements, and employee salaries using funds generated from normal business operations, but uncertainty is growing over time.
Negative sentiments are detected regarding the continuation of the encore discount event linked to the 28th anniversary exclusive super sale 'Homeplun Is Back,' which has been extended weekly for a month since the 28th of last month. Homeplus said, "Large mart competitors also organize various discount events repeatedly on a weekly basis throughout the year," adding, "We are not forcibly increasing events just to raise funds."
On the other hand, a representative from another large mart said, "While it is true that the industry holds weekly discount events, it is unusual to continue an event with the founding title throughout an entire month." They added, "It appears Homeplus is minimizing margins and increasing discount rates through self-burden such as membership benefits," pointing out, "There are limits to profitability."
In fact, at the Homeplus store that day, many products, especially fresh foods or deli items with short shelf lives, applied an additional 20-30% membership discount rather than major corporate manufacturer products.
As of that morning, Homeplus announced it had repaid about 547 billion KRW in trade receivables. This amount includes rehabilitation claims incurred before March 4 (the start of rehabilitation procedures) by 20 days, public interest claims for 20 days after, and repayments after the start of rehabilitation procedures. If the payment of February sales proceeds and settlement funds to partner companies and tenants is not smoothly completed by the end of this month, additional delivery suspension issues may arise.
On the 25th, officials from the Emergency Countermeasures Committee for victims of Homeplus product purchase fraud held a "Press Conference Reporting the Results of the Meeting Promotion between Homeplus Co-CEOs and the Emergency Committee" in front of the Homeplus headquarters in Gangseo-gu, Seoul, urging MBK Chairman Kim Byung-joo to contribute personal funds and to immediately return commercial claims. Photo by Yonhap News
Additionally, there are criticisms regarding Homeplus's recent announcement to repay all 461.8 billion KRW in accounts payable securitization balances, including card payment-based asset-backed short-term bonds (ABSTB), as trade receivables. ABSTB are short-term bonds issued by credit card companies based on Homeplus's purchase card payments for partner company products.
On the previous day, Lee Bok-hyun, Governor of the Financial Supervisory Service, appeared on a radio program and said, "We cannot trust MBK Partners, the private equity fund (PEF) operator and major shareholder of Homeplus," adding, "ABSTB is a short-term investment, and if they cannot promise when to repay or how to secure funds, it is practically a disguised lie." The ABSTB Victims Emergency Response Committee also claimed, "Even if classified as rehabilitation claims, there is a high possibility of long-term installment repayments, and there is a risk of principal loss due to Homeplus's bankruptcy during the repayment period," urging for prompt principal return.
A Homeplus representative stated, "The claims related to accounts payable securitization will be specifically included in the rehabilitation plan to be established by June 12, including repayment plans," adding, "We have agreed with the credit card companies, who are direct creditors, to treat card purchase payables as trade receivables, and upon court approval, we will faithfully repay the claims related to accounts payable securitization to the credit card companies according to the rehabilitation plan's repayment schedule."
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