E-Mart offers voluntary retirement after 2023 loss

E-Mart Inc., South Korea’s largest supermarket chain, has launched a company-wide early retirement program for the first time in its 31-year history, after posting its first annual loss in 2023.

On Monday, it announced the scheme to receive retirement applications from manager-level employees with more than 15 years with the company until April 12.

The workforce reduction reflects the rapid penetration of e-commerce platforms, including Coupang Inc. and China's AliExpress and Temu.

For the early retirement package, E-Mart will pay basic salaries of 40 months in a lump sum, equivalent to remuneration of 24 months, as severance pays, in addition to bonuses of 25 million won ($19,000) and extra pay of 10 million to 30 million won. It will also provide reemployment consulting.
 
In its recently issued annual report, E-Mart said it will establish a low-cost structure to improve profitability while streamlining non-core assets.

Last year, E-Mart posted a loss of 46.9 billion won on a consolidated basis, its first operating loss since it spun off from Shinsegae Group in 2011.

Heavy losses at Shinsegae Engineering & Construction Co., in which E-Mart is the largest shareholder with a 42.7% stake, took a heavy toll.

Its big-box supermarket division performed poorly as well. The division’s operating profit declined 27.4% from a year earlier, with sales down 2.1%.

Last week, a leading Korean credit rating agency downgraded E-Mart’s rating to AA- with a negative outlook. It was the first rating downgrade for the retailer by the agency.

To tide over the sluggish consumer spending, stubborn inflation and the rise of e-commerce platforms., E-Mart has reduced the number of its branch stores to 133 at the end of last year from over 140 at the end of 2021.

Its workforce was slimmed down to 22,744 at the end of last year from 23,844 at the end of 2021 and 25,214 at end-2020.

Industry observers said the workforce reduction at E-Mart could spread throughout the retail industry at home.

Its rival company Lotte Mart has downsized its workforce through three rounds of early retirement programs since 2021.

E-commerce companies are no exception for job cuts. 11Street Co., recently put up for sale, is again letting go of employees through early retirement programs this year.

Late last year, the retirement package was restricted to employees with more than five years with the company and aged over 35. But the latest program is available for all employees, regardless of age and years of service.

Write to Ji-Yoon Yang at yang@hankyung.com

Yeonhee Kim edited this article