Rumors of Five Guys Sale... Hanwha Galleria "Reviewing Options"

"Reviewing Various Options with the Global Headquarters"

Hanwha Galleria has responded to rumors about a potential sale of Five Guys, stating that it is "reviewing various options." Hanwha Galleria is the parent company of FG Korea, which operates Five Guys, and holds a 100% stake in the company.

According to the Financial Supervisory Service's electronic disclosure system on July 17, Hanwha Galleria addressed the rumors and media reports through an official disclosure, stating, "We are reviewing various options with the global headquarters to enhance the brand competitiveness of Five Guys," and added, "No direction has been decided yet, and we will make another disclosure when specific matters are determined."

Store exterior photo of Five Guys Gwanggyo Branch No.6. Provided by FG Korea.

Previously, it was reported that Hanwha Galleria had contacted domestic accounting firms and several private equity fund (PEF) management companies regarding a potential sale of Five Guys.

FG Korea has been expanding its presence by opening new stores, starting with the first Five Guys location in Gangnam, followed by branches in Yeouido, Express Bus Terminal, Gwanggyo, Seoul Station, and other areas. In 2023, when FG Korea first disclosed its financial results, its revenue was approximately 10 billion KRW and its operating profit was -1.3 billion KRW. However, within one year, revenue rose to 46.5 billion KRW and operating profit reached 3.4 billion KRW, turning the company profitable.

For this reason, some in the industry speculate that Hanwha Galleria may be trying to sell the subsidiary at a high price while it is performing well.

The speculation about a sale is further fueled by the fact that Hanwha Galleria's financial strength has significantly weakened. As of last year, Hanwha Galleria's revenue was 540 billion KRW and operating profit was 3.2 billion KRW. Compared to the previous year's revenue of 434.5 billion KRW and operating profit of 9.8 billion KRW, revenue increased slightly, but operating profit plunged by about 6 billion KRW. This was due to sluggish sales in its main department store business. The annual sales of the luxury hall, the core space of Galleria Department Store, declined last year due to the economic downturn and ongoing renovations.

The continued capital injection into FG Korea also appears to have influenced Hanwha Galleria's consideration of a sale. Hanwha Galleria participated in FG Korea's paid-in capital increase, injecting 5 billion KRW in December last year and 2 billion KRW in May this year. On July 14, the company also secured a 4 billion KRW short-term loan from Hanwha Galleria Timeworld, its department store division.