Shinsegae axes E-Mart, department store CEOs amid weak sales

South Korea’s retail giant Shinsegae Inc. on Wednesday carried out one of its most drastic executive reshuffles, replacing chief executives of its two business pillars, E-Mart Inc. and Shinsegae Department Store, and other subsidiaries.

The personnel changes, which include the reshuffle of other key affiliate CEOs, come as Shinsegae Group, the country’s 10th-largest conglomerate, is reeling from falling sales and weak share prices amid the economic slowdown.

Han Chae-yang, CEO of Josun Hotels & Resorts Co., has been named to lead E-Mart and its e-commerce unit SSG.COM, replacing the incumbent Kang Heui-seok.

Kang, known in the industry as group Vice Chairman “Chung Yong-jin’s man,” was supposed to complete his term at the end of 2026. Formerly a Bain & Company consultant, he was tapped as E-Mart's CEO in October 2019.

Han, the new E-Mart leader, will also head two affiliated offline distribution channel operators, E-Mart Everyday Inc. and E-Mart24 Inc.

Park Ju-hyung, chief of Shinsegae Central City, the group’s property development affiliate, has been named to concurrently lead Shinsegae Inc., the operator of Shinsegae Department Store, replacing the incumbent Son Yung-sik.

UNDER PRESSURE

The two outgoing CEOs – Kang and Son – have been under pressure to leave since last year amid declining sales.

Industry watchers said Shinsegae Group Chairwoman Lee Myung-hee made a bold decision to prevent the deteriorating business performance from affecting other subsidiaries.

“This is a quick decision-making in response to signs of crisis, such as worsening performance of major affiliates and falling stock prices following the acquisition of G-Market,” said a group executive.

Shares of E-Mart were trading 0.3% lower at 73,300 won late Wednesday on the main bourse. The stock has fallen 39% from a high of 119,900 won in mid-February.

E-Mart, Korea’s largest hypermarket chain, has posted lackluster profits so far this year despite Group Vice Chairman Chung’s strong push for profitability.

In the first half, E-Mart swung to 39.3 billion won ($30 million) in operating losses on a consolidated basis from a year ago. Sales increased a mere 1% on-year to 14.41 trillion won.

Shinsegae Inc. saw its first-half sales and operating profit fall 13% to 3.63 trillion won and 302 billion won, respectively.

RETAIL CLUSTER & CONCURRENT POSITIONS

This year’s annual executive reshuffle, which comes about a month earlier than usual, saw the creation of a retail cluster, a control tower that controls Shinsegae Group’s six retail businesses – E-Mart, E-Mart Everyday, E-Mart24, Shinsegae Property, SSG.COM and G-Market.

Another noteworthy aspect of this year’s changing of the guard, which affected nearly 40% of affiliate CEOs, is the increase in the number of chief executives in charge of multiple group subsidiaries.

Shinsegae Food Co. CEO Song Hyun-suk will also become the chief executive of Shinsegae L&B Co., which operates wine shops under the Wine & More brand in Korea.

Shinsegae Property CEO Im Young-rok will also lead Josun Hotels & Resorts.

Some other new CEOs include Shinsegae Live Shopping Chief Executive Lee Seok-koo, who previously led Starbucks Korea for 11 years.

Kim Hyun-woo has been hired from outside Shinsegae to lead Mindmark Inc., a subsidiary specializing in content production. Lee Ju-chul, a former G-Market executive, has been tapped as CEO of W Concept, a fashion mall operator.

“Through this personnel reshuffle, we expect to better cope with the current business difficulties,” said a group official.

Write to Dong-Hui Park at donghuip@hankyung.com

In-Soo Nam edited this article.