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E-Mart Inc. Faces First Annual Operating Loss Since 2011 Spin-off

South Korea's leading supermarket chain cites Shinsegae E&C's challenges as a key factor in its financial downturn
South Korea
e 139480.KO Mid and Small Cap 2000 Consumer 250
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E-Mart Inc., South Korea’s premier supermarket chain, has reported a provisional consolidated operating loss of 46.9 billion won ($35.1 million) for the last fiscal year, marking its transition to a loss-making entity for the first time since its 2011 separation from Shinsegae Group. This downturn reflects a significant shift from the company’s previously robust financial performance.

Despite a slight 0.5% increase in annual sales to 29,472.2 billion won ($22 billion), E-Mart registered a substantial net loss of 187.5 billion won ($140.4 million), a first in the company’s history. The decline in profitability is largely attributed to the adverse outcomes faced by its affiliate, Shinsegae Engineering & Construction Co. (Shinsegae E&C), which suffered a loss of 187.8 billion won ($140.6 million) due to escalating construction costs and a sluggish real estate market. This marks a significant increase in losses for Shinsegae E&C, rising by 175.7 billion won ($131.6 million) from the previous year.

While E-Mart’s standalone sales revenue saw a 6.9% increase to 16,550 billion won ($12.4 billion), its operating profit witnessed a 27.4% decrease, settling at 188 billion won ($140.8 million). This financial snapshot underscores the challenges faced by E-Mart and its affiliates in navigating rising costs and market volatility, casting a spotlight on the need for strategic adjustments to counteract these adverse trends.

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