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Shinsegae Group to split department store and supermarket divisions

Published: 30 Oct. 2024, 11:48 Updated: 30 Oct. 2024, 18:53

KIM JU-YEON
[email protected]

Shinsegae Group's supermarket Emart, pictured top, and Shinsegae Department Store will split into two separate entities as announced Wednesday. [YONHAP]

Shinsegae Group will split its department store and supermarket divisions into two separate entities, the retail giant said Wednesday.

However, the group declined to specify the timing of the separation, only mentioning that the latest reshuffle is aimed at supporting upcoming plans.

In the annual appointment, president Chung Yu-kyung was promoted to chairman of Shinsegae.

This comes nine years after Chung was appointed president of Shinsegae Group in December 2015. Her brother, Chung Yong-jin, has helmed Shinsegae Group as chairperson since March and oversees the supermarket division.

As of Wednesday, the siblings hold a 18.56 percent stake each as the largest shareholders of their respective divisions — Chung Yong-jin in Emart and Chung Yu-kyung in Shinsegae — that gives them power over the marketplaces' subsidiaries. Their mother, Lee Myung-hee, owns 10 percent of each.

Shinsegae Group said Chung Yu-kyung's promotion served to “strengthen responsible management and help the split in divisions” in a press release.

“Starting with the shuffle in personnel, we plan to concentrate our efforts so that the split can happen smoothly,” the conglomerate said. “The possibility of a successful turnaround has been identified as each division restores their competitiveness in their main business, so we determined that this year was appropriate to start the split.”

Shinsegae Group chairperson Chung Yong-jin, left, and president Chung Yu-kyung [YONHAP]

Even under the current structure, the department and supermarket divisions — centered on their respective major retailers, Shinsegae Department Store and Emart — have been operating independently as separate departments since 2019 while under the same Shinsegae umbrella.

The department store division has focused on expanding its fashion and beauty retail, while Emart owns other retail subsidiaries, mainly centered on groceries, including Starfield, coffee chain Starbucks Korea and convenience store Emart24.

A source in the retail industry who wished to remain anonymous said both divisions would benefit from the split since they could expand their businesses.

“Because Shinsegae Department Store and Emart are in the same group, they naturally avoid launching businesses that interfere with the other's interests, but with the division, they can become free of such conflicts,” the insider said.

“For instance, the department store division would have to tiptoe around Emart when they wanted to start new businesses in groceries or supermarkets, especially as Emart is in the red. Such restrains have now been gotten rid of.”

Heads of Emart e-commerce subsidiaries SSG.com and Gmarket were replaced in June after the retailers consecutively recorded operating losses over several quarters. SSG.com slimmed its business operations and appointed an executive with experience in groceries and logistics to focus on those sectors.

Shinsegae Group also emphasized its department store's strong sales recorded in the first half of this year, it's largest ever, in its Wednesday press release.

The annual appointment also saw changes to the C-suites of Emart, Emart24, Shinsegae International, Josun Hotels & Resorts, Shinsegae Food, Shinsegae L&B and the SSG Landers.

Shinsegae ended at 151,400 won ($110) on Wednesday, up 1.54 percent, or 2,300 won, from the previous trading session.

Update, Oct. 30: Story updated with additional details of the split and comment from source in the retail industry.

BY KIM JU-YEON [[email protected]]