After years of experiencing poor performance and even recording losses at one point, Emart is forecasting a rebound in its performance this year. Annual operating profit is projected to exceed 500 billion won for the first time in eight years since 2017.
Since Chairman Chung Yong-jin took office in March last year, a rigorous restructuring has been credited with enhancing the competitiveness of its core business, leading to improved performance. Emart aims to achieve sales of 34 trillion won and an operating profit of 1 trillion won by 2027, alongside asset efficiency and increased logistics and cost competitiveness.
According to FnGuide, a financial information company, Emart is estimated to record sales of 29.36 trillion won and an operating profit of 506.6 billion won this year. This reflects a 1.17% increase in sales and a staggering 975.65% increase in operating profit compared to the same period last year. Exceeding an operating profit of 500 billion won will mark the first time in eight years since 2017 (566.9 billion won).
Emart's profitability sharply deteriorated as it competed with rapidly growing e-commerce giants like Coupang and Market Kurly in the late 2010s. The profitability of stores that resulted from past aggressive expansion also contributed to rising fixed costs. The revised Distribution Industry Development Act, which has strengthened regulations on large discount stores, also had an adverse impact on performance.
The acquisitions made to enhance online competitiveness also backfired. Emart, which owns the e-commerce platform SSG.com, spent large amounts to acquire Gmarket and W Concept successively in the early 2020s. However, it could not escape losses, which negatively impacted its performance.
The warehouse-style store, Traders, has somewhat offset poor performance by steadily increasing the number of stores by 2 to 3 each year due to consistent demand, but the core businesses of discount stores (large supermarkets) and e-commerce have struggled. Emart's operating profit, which had consistently maintained around 500 billion won from 2014 to 2017, plummeted to 462.8 billion won in 2018 and 150.7 billion won in 2019.
Subsequently, Emart's operating profit saw slight rebounds at 237.2 billion won in 2020 and 316.8 billion won in 2021, but fell again to 135.6 billion won in 2022, recording a loss of 46.9 billion won in 2023, marking its first loss since its founding. Last year, its operating profit turned into a surplus of 47.1 billion won in just a year, but it still remains at a disappointing level compared to the past.
In March 2024, Chairman Chung Yong-jin, who took office and received full management authority, transitioned to an emergency management system and implemented a rigorous restructuring. This included the company's first voluntary retirement program in its 31-year history and the replacement of the heads of each affiliate based on performance.
Along with this, Emart merged with Emart Everyday, which was independently operating its own logistics centers, optimizing the delivery structure. The existing Emart sourced products separately for its diverse retail channels, including Emart, Traders, No Brand, and Everyday, but this was unified to enhance bulk purchasing and logistics integration, thereby acquiring more products at lower prices. Recently, it has introduced new concept stores tailored to regional characteristics, such as 'Starfield Market' and 'Emart Food Market.'
In the first quarter of this year, Emart recorded sales of 7.22 trillion won and an operating profit of 159.3 billion won. Compared to the same period last year, sales increased by 0.2%, and operating profit rose by 238.2%. Among these, the operating profit from the discount store sector (77.8 billion won) increased by 53.7% compared to the same period last year, driving overall performance.
At the beginning of this year, Emart set a goal to achieve sales of 34 trillion won and operating profit of 1 trillion won by 2027. The plan is to expand market share through efficient store operations, while also improving the e-commerce business, which has been accumulating deficits, in order to build a stable revenue structure.
Seohyun Jung, a researcher at Hana Securities, stated, 'Emart has established an integrated purchasing structure and is reducing inefficient promotions, leading to a continuous increase in gross profit margin. In the second half of the year, additional growth in scale can be expected due to domestic activation and improvements in household purchasing power.'