South Korean retail giant Emart, headed by Shinsegae Group Vice Chairman Chung Yong-jin, posted its first annual loss since it went public in 2011. While growing losses from Emart’s construction subsidiary Shinsegae E&C are the main reason for its sluggish performance, experts and analysts are concerned that the company’s core retail business is also faltering amid the rise of online retailers.
Emart reported an operating loss of $35.12 million (46.9 billion won) in 2023, according to the company’s regulatory filing on Feb. 14. This is the first time Emart recorded an annual operating loss since it was spun off from Shinsegae Group in 2011. Sales rose 0.5% to a record high of 29 trillion won during the same period.
Despite record sales, the company incurred significant losses as the performance of its subsidiary, Shinsegae E&C, was hit by rising construction costs and a downturn in the real estate market. Shinsegae E&C’s operating loss amounted to 187.8 billion last year. Emart holds a 42.7% stake in Shinsegae E&C.
The retailer’s troubles lie in the fact that its core businesses are not faring much better. Emart’s e-commerce platforms, SSG.com and Gmarket, also posted operating losses of 103 billion won and 32.1 billion won, respectively. Emart’s discount stores also experienced a slowdown in growth, with operating profits down 27% year-on-year to 180 billion won.
As a result, Emart’s profit margin has been declining over the last decade. The company posted a profit margin of 1.53% last year, a steep fall compared to 7.08% in 2015.
Emart’s recent performance contrasts with Shinsegae Department Store’s solid growth. The luxury department store chain is led by Chung Yoo-kyung, Vice Chairman Chung’s younger sister. The brother and sister are the heir and heiress of South Korea’s retail conglomerate, Shinsegae Group.
Shinsegae Department Store posted record sales of 2.557 trillion last year, up 2.8% from the previous year. Growth in major department stores contributed to the surge in sales. Notably, the Shinsegae Department Store in the upscale Gangnam District in Seoul surpassed 3 trillion won in sales from a single store, a first in the country’s retail sector.
Shinsegae Department Store’s operating profit fell 12.4% to 439.9 billion won during the same period as higher interest rates and inflation led to additional expenses for the company.
“Regarding last year’s performance, the sister came out on top even though the overall results were not fully satisfactory,” said an industry insider.
In December 2015, Shinsegae Group Chairwoman Lee Myung-hee established a distinct management structure for the siblings by appointing her son Chung Yong-jin to lead the group’s discount stores, food, and hotel business. Her daughter Chung Yoo-kyung was chosen to head the luxury department store.
