Daijiworld Media Network - Seoul
Seoul, Nov 11: Emart, South Korea's largest discount retailer, reported a 99.8 per cent year-on-year plunge in its third-quarter net profit, hit by equity-method losses from its affiliates.
Net profit for the three months ended September fell to 600 million won (US$449,102) from 310.3 billion won in the corresponding period last year, the company said in a regulatory filing on Wednesday, Yonhap news agency reported.
"Losses from affiliates, including Starbucks Coffee Korea (SCK) Co. and e-commerce platform SSG.COM, weighed on our quarterly earnings," a company spokesperson said.
SCK, operated by Emart, reported an operating loss of 45.3 billion won in the third quarter, partly due to the continuing fallout from a controversial promotional campaign launched in May in connection with the 1980 pro-democracy uprising in Gwangju, around 270 km south of Seoul.
Emart holds a 67.5 per cent stake in the coffee chain. On May 18, the anniversary of the Gwangju uprising, SCK launched an online promotion titled "Tank Day". The campaign was withdrawn within hours following widespread public criticism, as the term "tank" evoked memories of the military's violent crackdown on pro-democracy demonstrators during the uprising.
Shinsegae Group Chairman Chung Yong-jin apologised for the promotion, as did Starbucks' US headquarters.
SCK also skipped its annual summer e-Frequency promotion this year as part of efforts to restore customer confidence, further affecting its quarterly performance.
Emart's operating profit declined 69.6 per cent to 46.1 billion won in the third quarter from 151.4 billion won a year earlier. However, sales increased 1.2 per cent to 7.49 trillion won from 7.4 trillion won.
For the first nine months of the year, the company reported a net loss of 56.8 billion won, compared with a net profit of 362.6 billion won during the corresponding period last year.
Operating profit for the nine-month period fell 45.4 per cent to 181.3 billion won from 332.4 billion won, while sales declined 0.6 per cent to 21.5 trillion won from 21.66 trillion won.