Homeplus to Review Closure of 5 Stores Amid Cash Flow Issues

As part of emergency measures responding to deteriorating business conditions

홈플러스 “현금흐름 개선 위해 5개 점포 영업중단 검토”

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Homeplus is considering suspending operations at five stores as part of efforts to improve its cash flow.

According to industry sources on December 2, the stores under review for closure are located in Gayang, Jangrim, Ilsan, Woncheon, and Ulsan Bukgu.

Homeplus entered a company-wide emergency management system in August following worsening business conditions stemming from stricter terms from key suppliers and a reduction in delivery volumes. As part of survival measures, the retailer had initially decided to close 15 underperforming stores where rent adjustments could not be negotiated.

However, on September 19, a task force team dedicated to normalizing the Homeplus situation visited the company and discussed restructuring options. The team agreed to postpone the closure of the 15 stores until the end of the year, contingent on key suppliers restoring pre-restructuring terms and normalizing delivery volumes, and to focus on mergers and acquisitions (M&A) prior to formal court approval.

The restoration of supplier terms and normalization of deliveries have been delayed, exacerbating the company’s liquidity issues. Reduced delivery volumes have led to declining sales, making normal operations unsustainable while fixed costs continue to accrue, significantly impacting cash flow and operating performance. This situation underscores the challenges facing retailers navigating complex supply chain dynamics.

Homeplus also reported difficulties in workforce management. Employee departures have continued due to uncertainty surrounding the company’s future following the start of the restructuring process, while new hires have been difficult to secure. As a result, some stores are struggling to maintain even basic operations due to staffing shortages.

The company explained that with the sale process also prolonged, cash flow has reached its limit, and to prevent a situation of insolvency, it is now reviewing the suspension of operations at some of the 15 stores previously slated for closure – specifically those with the largest losses.

Employees at the affected stores will be reassigned to other locations facing staffing shortages, ensuring 100% employment while addressing critical personnel gaps and maintaining store operations.

“We will do our best until the very end to normalize operations and successfully complete the corporate rehabilitation process,” a Homeplus representative stated.