Homeplus struggles on rocky road to recovery as wages, supplier payments fall behind

Homeplus, which only recently managed to reopen its doors, is trudging a difficult path to recovery as a cash crunch leaves it unable to pay employee wages and supplier payments on time.

The timing of any merger and acquisition deal for its hypermarket operations remains unclear, and the retailer faces inevitable damage if it cannot engineer a dramatic turnaround through sharply higher sales.

According to the retail industry, Homeplus has yet to set a schedule for paying the remaining 50 percent of August wages or Chuseok bonuses.

Of the August wages, half was paid in two installments — on Oct. 23 and Friday — while the other half remains outstanding.

Homeplus employs about 9,000 workers, with monthly labor costs estimated at around 23 billion won ($17.1 million), but sluggish sales since reopening mean the company can only cover roughly 10 billion won in monthly labor costs.

Of late, payments to some suppliers have also been delayed.

Falling behind on supplier payments risks triggering a vicious cycle: no payments means no deliveries, fewer products on shelves drives customers away, and declining foot traffic ultimately cuts into sales.

On top of that, Homeplus has accumulated roughly 10 billion won in unpaid electricity bills and has also fallen behind on national health insurance contributions.

An M&A deal is ultimately the only realistic path to resolving the cash crunch and repaying rehabilitation and public-interest bonds, yet the timeline for serious negotiations remains unclear.

Homeplus and its sale manager Samil PwC had originally aimed to receive letters of intent from prospective buyers by October, but have since decided to continue approaching potential acquirers without setting a separate deadline.

Sources said at least one party has recently signaled interest in an acquisition.

However, because letters of intent are being accepted on a rolling basis with no fixed deadline, it is difficult to gauge when negotiations will intensify or when a deal might close.

For that reason, concerns have been raised that even if an acquirer emerges and talks get underway in earnest, store operations and job security could still take a hit.