Retail chain Homeplus to shutter 15 locations, implementing temporary unpaid leave for employees due to financial hardships
Homeplus, a leading South Korean hypermarket chain, is currently undergoing a court-supervised restructuring process that began five months ago following its entry into receivership in March. The company, facing severe financial difficulties, is in a critical "survival" mode [1][2][3][4].
The restructuring plan includes the closure of 15 leased stores nationwide, primarily in major regions such as Seoul, Gyeonggi Province, South Chungcheong, Daejeon, North Jeolla, Daegu, Busan, and Ulsan. These closures are a result of failed rent reduction negotiations with landlords seeking cuts of up to 50% [1][2][4].
In addition to store closures, Homeplus has implemented a voluntary unpaid leave system for all headquarters employees starting next month, extended partial executive salary returns, and initiated high-intensity expense reductions to improve cash flow and reduce operating costs [4].
The company aims to rebuild cooperation with suppliers by restoring normal payment cycles and credit limits. However, major suppliers are currently shortening payment cycles and demanding upfront payments or new deposits [1][2].
The court-led restructuring process has posed risks to the success of the court-approved pre-rehabilitation merger and acquisition (M&A) [3][4]. Delayed M&A progress and worsening financial conditions could potentially jeopardize the jobs of about 22,000 employees and subcontractors linked to Homeplus.
Despite these challenges, Homeplus assures job continuity for employees at stores slated for closure through transfers to nearby branches and employment stability support [2]. The company faces a projected annual loss of around KRW 80 billion if rent issues persist at key locations [2].
The deterioration of Homeplus's credit standing since entering rehabilitation has been notable. Trade payables are treated as priority claims under the rehabilitation process [1]. The company's earlier pledge by MBK Partners to sell the company as a whole rather than piecemeal seems to have been contradicted by these recent developments.
In a statement, a union official expressed concern that abandoning stores is giving up on Homeplus, while the CEO warned that the current situation could jeopardize the court-approved pre-rehabilitation M&A [1][3]. The union also denounced the measures, claiming they weaken the brand's value rooted in its nationwide store network [1].
[1] Yonhap News Agency. (2025, August 1). Homeplus to close 15 stores as part of cost cuts. Yonhap News Agency. [2] Kim, J. (2025, August 2). Homeplus to close 15 stores amid restructuring. The Korea Times. [3] Chung, J. (2025, July 30). Homeplus CEO warns of M&A jeopardy amid rent woes. The Korea Herald. [4] Park, M. (2025, August 3). Homeplus to offer voluntary unpaid leave to all headquarters employees. The Hankyoreh.
The restructuring plan in the industry, initiated by Homeplus, involves closing 15 stores nationwide and implementing cost reduction measures such as voluntary unpaid leave for headquarters employees and extended salary reductions for executives.
Major suppliers, in the finance sector, are now demanding upfront payments or new deposits from Homeplus due to the deterioration of its credit standing since entering rehabilitation.
