South Korean retail giant Emart is slimming down operations by closing unprofitable stores, including 18 Boots branches.
A response to weak earnings
The company logged KRW161bn in operating profit during the first three quarters, down by 60% from previous year. Whilst its hypermarkets and supermarkets are showing signs of recovery with improved same-store sales growth, specialty stores posted KRW63bn operating loss.
To turn around the business, the company is carrying out an aggressive restructuring program as previously announced.
Up to date, the company closed 40 stores this year, including 18 out of its 33 Boots health & beauty stores. Emart opened Boots in Korea in 2017 to challenge Korea's number one H&B brand Olive Young by CJ Group, but ended up downscaling due to deteriorating profits.
It also closed the Pangyo branch of its technology-retailing chain Electro Mart and is now looking at trimming down its Pierrot Shopping network.
Focusing more online
The downscaling is largely attributable to the country’s gloomy retail market. The weakening domestic consumption, rise of ecommerce, increase of the country’s minimum wage and statutory 52-hour workweek force Emart and its competitors to come up with a whole new strategy to survive in the future.
It is expected that Emart will accelerate its business transformation by rationalising further its store networks and focusing much more on the online sector, SSG.com, to drive the business forward.
Retail Analysis Asia