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Homeplus issues rental agreement termination notices for 17 stores

Published: 14 May. 2025, 21:25

A Homeplus supermarket in Seoul on April 22 [NEWS1]

Homeplus, Korea’s second-largest hypermarket chain, has notified landlords of 17 leased locations that their rental contracts will be terminated, the company said Wednesday.

According to Homeplus, the decision was made after it failed to reach agreements with landlords within the legally required time frame and obtained court approval to proceed with the contract terminations.

The retailer, currently undergoing corporate rehabilitation, is required under the Debtor Rehabilitation and Bankruptcy Act to notify its intention to maintain or terminate leases by May 15, Thursday. Failure to respond is considered a waiver of the right to terminate, which the company cited as a key reason for taking early action.

Of Homeplus’s 127 stores nationwide, 68 are operated on leased properties. Excluding locations leased from local governments or scheduled for closure, Homeplus is currently renegotiating rent for 61 stores. The 17 stores facing termination are largely located in suburban areas such as Siheung, Ilsan, Ansan, Cheonan and in regional cities like Jeonju and Busan.

The company has long pointed to excessive rent as a primary cause of its financial instability, arguing that the lease rates were set during the heyday for large retailers and are now therefore unsustainable during the present economic uncertainty. Most leases were signed before MBK Partners acquired Homeplus in 2015, with typical lease terms running 20 to 25 years.

The Homeplus headquarters on April 28 [YONHAP]

Currently, Homeplus pays between 30 billion and 40 billion won ($21.5 million to $28.6 million) in monthly rent. The shift in consumer trends toward online shopping has put further pressure on brick-and-mortar retail. According to the Ministry of Trade, Industry and Energy, the share of supermarkets in Korea’s total retail sales dropped from 23.8 percent in 2016 to 13.5 percent in 2024, while online sales grew from 32.4 percent to 50.6 percent over the same period.

Despite the lease terminations, Homeplus emphasized that no job cuts would result. “We plan to guarantee employment for all affected employees, with no artificial restructuring,” the company said. Employees at the affected stores will be reassigned to nearby locations and offered financial incentives.

However, workers are pushing back, saying commuting long distances is not feasible for many of them who live near their current workplaces.

Protesters hold a placard reading ″Homeplus″ at the Gwanghwamun Plaza in central Seoul on April 28. [YONHAP]

Members of the Korean Confederation of Trade Unions hold a protest at the Gwanghwamun Plaza in central Seoul on April 28. [NEWS1]

In a statement, the Homeplus labor union claimed, “The lease termination is evidence that MBK Partners is executing a restructuring scenario aimed at liquidation, not rehabilitation.” The union began a one-person protest in front of the Seoul Bankruptcy Court on Wednesday.

Homeplus said it would continue negotiations with the landlords of the 17 stores until June 12, the deadline to submit its rehabilitation plan. However, reaching agreements may be difficult, as many of the properties are owned by real estate funds.

“If the landlord were an individual, they might agree to lower the rent, but fund managers lack the flexibility to revise lease terms,” said one investment industry insider. “This could be a strategy to offload underperforming stores and exit with only profitable assets.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY CHOI HYUN-JU [[email protected]]