Emart selling stake in Costco Korea as focus shifts onlineRetail giant Emart plans to give up its 3.3 percent stake in Costco Korea, the company said Wednesday, in hopes of raising more capital for its other ventures including expansion of its shopping mall and e-commerce businesses.
The selloff includes the real estate on which Costco operates. Emart currently owns the land for Costco Korea’s three stores in Seoul, Daegu and Daejeon.
The Korean retailer’s relationship with Costco dates back to 1998, five years after the American warehouse chain acquired its rival Price Club. Emart had a stake in Price Club’s Korean operation, and the acquisition gave the Korean retail giant a 3.3 percent stake in Costco Korea.
The lease that the two companies signed in June 1998 has a duration of 20 years, with an expiration date of May 2018.
Emart is calling the sale a win-win for both companies. Costco will continue running its three stores in Korea, and the capital that Emart raises from the deal “will contribute to diversifying the company’s business portfolio and enhancing management efficiency,” Emart said in a statement.
Since the beginning of the year, Emart has been selling off many of its assets, including old stores and unused property, as part of an effort to downsize and raise funds to restructure its business.
In addition to selling its stake in Costco, Emart said Wednesday that it had sold its store in the Siji-dong neighborhood of Daegu to a real estate developer, explaining that another Emart location close by was covering the same market.
Land in Hanam, Pyeongtaek and Siheung, cities in Gyeonggi where Emart was planning to build new stores, was also on the chopping block this year as the retailer shifts tack to online shopping and other retail channels.
Emart’s growth to Korea’s largest retailer was possible because of a discount store boom in the early 2000s, when the market was nascent and competition was high. But with the advent of computers and smartphones, the retail atmosphere has changed, and Emart is expanding its online shopping services.
The retail giant is also seeking to grow its Emart24 convenience store chain, Starfield Hanam mall and Emart Traders warehouse store, all tasks that require fresh capital.
BY SONG KYOUNG-SON [firstname.lastname@example.org]