Homeplus Resumes Operations Today...A Critical Month Begins

Soft Reopening of 67 Stores on the 7th, Full Launch Set for the 13th
Food Suppliers: Conditional Delivery with "Prepayment Principle"
Adopting Trader Joe's Single-Story, 3,300-sqm PB Model
Challenges Remain in Attracting Buyers

Homeplus, currently undergoing corporate rehabilitation proceedings, has secured 200 billion won in DIP (Debtor in Possession) financing from Meritz Financial Group, initiating its efforts to normalize operations. After facing the risk of its rehabilitation plan being scrapped just last month, Homeplus is now using the newly secured funds to reopen stores across the country and to restore its supply chain.

However, industry insiders believe that this financial support is merely the starting point for Homeplus’s rehabilitation. Since DIP financing is an emergency fund provided under court management to keep a business running, it does not guarantee recovery. If Homeplus fails to prove its ability to normalize operations and generate cash flow within the next month, there are growing concerns that both the court approval of the rehabilitation plan and the sale of the main business entity could be at risk.

200 Billion Won Fund Injection Complete...Stores Reopen After 22 Days

According to sources in the retail and financial sectors on August 7, Homeplus initiated a soft opening of 67 key stores from this day and is scheduled to resume full operations on August 13.

Previously, Homeplus received final approval on August 5 from the Seoul Bankruptcy Court to utilize the 200 billion won emergency operating fund. This came roughly three weeks after the three main Meritz Financial entities—Meritz Securities, Meritz Capital, and Meritz Fire & Marine Insurance—decided to provide support on July 16.

Homeplus is prioritizing use of these funds to pay suppliers, accelerating the restoration of its halted supply chain. In fact, since August 4, staff have been deployed to all stores to prepare for reopening. This comes 22 days after all stores temporarily suspended operations on July 13. Employees are engaged in tasks such as restocking shelves, checking inventory, and displaying new products.

With the funds now being deployed, product supply is gradually returning to normal. The supply of fresh food products—including agricultural, livestock, and fisheries products—dairy, and processed meats, all of which were previously halted, is being resumed first. Additionally, e-commerce operations responsible for same-day in-store delivery are being restored by reorganizing delivery vehicles and picker staff, with the goal of resuming both online and offline sales simultaneously.

"Prepayment Is Essential"...Food Companies Ready for Delivery

Major food companies have begun preparing for deliveries in line with the reopening schedule. Homeplus reportedly sent official correspondence to these companies asking them to supply products by the designated date.

Some companies, such as Daesang and CJ CheilJedang, have already started deliveries. In the case of CJ CheilJedang, due to the time remaining before the formal reopening, they plan to begin with ambient and frozen products that have longer shelf lives, and gradually expand to other categories such as refrigerated goods.

Companies like Seoul Milk, Lotte Wellfood, Pulmuone, Nongshim, and Lotte Chilsung Beverage are currently coordinating conditions and product lists for potential deliveries. It is anticipated that Seoul Milk and Lotte Wellfood will be able to supply products to shelves as early as this weekend. While it may be difficult to meet the August 7 soft-opening date for deliveries, most companies expect to supply products before the official reopening on August 13. Pulmuone plans to commence deliveries on the 13th.

However, companies such as Samyang Foods, Ottogi, and Orion are still reviewing whether they will deliver. Some are discussing terms with Homeplus, while others are carefully considering internally whether to proceed with deliveries at all. In the case of alcoholic beverages, companies such as Hite Jinro have stated they are monitoring negotiations between liquor wholesalers and Homeplus.

Food companies emphasize that, given previous instances where payments were not settled, prepayment is an absolute requirement for deliveries; only the amount prepaid will be delivered. The food industry estimates that, including small and medium-sized companies, the total amount of unpaid settlements exceeds 200 billion won. Homeplus, under pressing circumstances, is paying food suppliers and securing deliveries starting with key products.

An industry insider commented, "With outstanding unpaid invoices remaining, it is not possible to deliver products unconditionally. The principle is to deliver in line with payment."

Yonhap News Agency

PB Gamble...Will the 'Trader Joe's' Experiment Succeed?

However, the industry believes that simply reopening stores will not be enough for Homeplus to survive. The hypermarket sector itself has entered a stagnant growth phase amid the rise of online shopping and a downturn in consumer spending, so merely resuming business as before is unlikely to restore profitability.

This is why Homeplus is introducing a new operational strategy modeled after the American retailer Trader Joe's. Trader Joe's manages just around 4,000 core products, of which over 80% are private brands (PB), achieving high profitability and inventory turnover—a widely cited example.

Likewise, Homeplus plans to streamline its large, multi-story stores down to single-floor locations of around 3,300 square meters (approximately 1,000 pyeong), and shift its focus away from non-grocery and electronics toward fresh food, its own PB brand 'Simple Plus', pre-packed meal brand 'Home Meal', and essential daily goods.

The industry sees PB expansion as both a strategy to improve profitability and a realistic way to supplement manufacturing supply chains that are not yet fully restored. However, some point out that simply increasing the proportion of PB products does not guarantee success. While Simple Plus has succeeded in drawing customers through ultra-low prices, it has had limited impact as a stable revenue source. By contrast, Trader Joe's continuously introduces unique, signature PB products that customers actively seek, cultivating a loyal customer base.

An industry source stated, "What makes Trader Joe's competitive is not just its high PB ratio, but its outstanding product planning and differentiation. If Homeplus simply increases cheap PB offerings, it will struggle to stand out. Securing exclusive, must-have products that give consumers a reason to visit will be crucial."

One Month That Will Decide the Fate...Test for Rehabilitation and M&A

Time is not on their side. The deadline set by the Seoul Bankruptcy Court for approving the rehabilitation plan is September 4. Given the creditor meetings and negotiations required, Homeplus essentially has just one month left to demonstrate that business normalization is possible.

The approximately four-week results from the soft opening on August 7 onward will be key evidence to persuade creditors. The industry believes that, more than sales growth, indicators such as the number of visitors, average spending per customer, inventory turnover, and cash flow generation will be critical in determining the viability of recovery. Restoring consumer trust and bringing back customers who have left are also seen as crucial challenges.

Ultimately, the end goal for Homeplus’s rehabilitation is the sale of remaining business units, including the headquarters, hypermarket, and online operations. This latest reopening is also viewed as a step toward boosting corporate value and attracting potential buyers.

Homeplus is seen as attractive in real estate terms, as it directly owns about 58 out of its 126 nationwide stores. If operations normalize, having offline branches across the country alongside online operations could be a valuable point of interest for investors.

However, potential buyers are expected to focus more on stable cash flow generation and whether store productivity improves—rather than just sales volume. Already, in last year’s attempted sale, there were no bidders in the final round and the process failed. In addition, Samil PricewaterhouseCoopers, the court-appointed examiner, has evaluated that the liquidation value of Homeplus is about 1.2 trillion won higher than its value as a going concern. This means that selling off assets could be more advantageous for creditors than continuing operations, which poses a significant challenge for both the review of the rehabilitation plan and any future sales negotiations.

If the rehabilitation plan is rejected or the main business sale falls through, a restructuring of the domestic retail market will be inevitable. When Homeplus was operating normally, its annual sales were about 7 trillion won, with roughly 6 trillion won attributable to hypermarket and online sales, excluding the Express format. The industry estimates that if just 30% of this volume shifts to competitors such as Emart and Lotte Mart, each would see their sales rise by roughly 1.8 trillion won.

A senior industry official remarked, "The court's approval of the DIP facility is less about recognizing the likelihood of recovery, and more about buying time to reassess corporate value. Without clear progress in business normalization and improved cash flow, the chances of rehabilitation plan approval and a successful M&A will diminish significantly."

This content was produced with the assistance of AI translation services.