Emart to buy back shares after first quarterly loss

Emart said it will buy back more than 90 billion won ($80 million) of its own shares after posting its first quarterly operating loss since its establishment in 1993 in the second quarter.

Emart plans to buy 900,000 of its own shares - around 3.23 percent of the issued stock - worth around 94.95 billion won as of the closing price Tuesday.

Emart will make the purchases over the next 12 weeks.

It will be the first time Emart buys its own shares since it was spun off from Shinsegae in 2011.

The retailer said it wants to stabilize the nose-diving price of the company’s shares.

“The decision was made out of confidence in the future growth of the company,” said a spokesperson for Emart.

“We will strengthen the benefits for our shareholders by improving the company’s future liquidity through diversification of our business portfolio, renewing existing stores and focusing on the operation of profitable specialty stores.”

The retailer said it signed a memorandum of understanding with KB Securities on Tuesday to attempt sales and lease-backs of around 10 of its stores. After selling the stores, Emart plans to lease them back for at least a decade.

Emart plans to complete the process, which includes recruiting investors, within this year.

In a preliminary report last week, Emart posted 4.58 trillion won in sales for the April to June period this year, up 14.8 percent from 3.99 trillion won in the same period last year.

It also reported a 29.9 billion won operating loss for the quarter, down from a 53.3 billion won operating profit last year.

Following the announcement Tuesday, Emart’s shares rose 6.64 percent, or 7,000 won, to close at 112,500 won.

BY JIN MIN-JI [jin.minji@joongang.co.kr]