November 21, 2024

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Shinsegae Chair Chung Yu-kyung (Shinsegae Group)

South Korean retail giant Shinsegae Group on Wednesday announced a structural revamp dividing its flagship retail business into two companies E-Mart and Shinsegae Department Store, making official the sibling leadership of the founding family.

Chung Yu-kyung, president and younger daughter of Chairwoman Lee Myung-hee, was promoted to chair to lead the department store business, while her elder brother Chung Yong-jin, who was promoted to chair in March, will be responsible for the E-mart supermarket chain and its affiliates.

Since 2011, Lee, the Shinsegae matriarch and the youngest daughter of late Samsung Group founder Lee Byung-chull, has worked on consolidating the siblings' leadership through stock transfers and exchanges.

As of today, Yong-jin and Yu-kyung each hold an 18.56 percent stake in E-Mart and Shinsegae, respectively, as the largest shareholders. Lee holds a 10 percent stake in both companies.

Born in 1972, Chung graduated from Seoul Arts High School and initially enrolled in the Visual Design program at Ewha Womans University before studying abroad in the United States. She graduated from the Rhode Island School of Design with a degree in graphic design.

She joined Shinsegae's Chosun Hotel in 1996 as an executive director and moved to Shinsegae Co., as vice president in 2009, later becoming president in 2015.

With her design background, she has been recognized for her significant contributions in store design and the fashion sector in particular. Through Shinsegae International, she played a key role in importing renowned global brands such as Giorgio Armani, Coach and Dolce & Gabbana, and also launched Shinsegae's lifestyle brand, Jaju.

Chung has been referred to as a rather low-profile leader, alongside her mother, Lee. This contrasts sharply with her brother, Chung Yong-jin, who is known for his active public presence on social media. While she has typically entrusted management and external activities to professional executives and focused on setting the overall direction, attention is now turning to whether she will increase her external visibility following her promotion.

Shinsegae Group has been preparing for this separation since 2019, by restructuring Shinsegae and E-Mart as practical holding companies for the department store and E-Mart sectors, respectively. Through this, the department store division expanded its market competitiveness in its fashion, beauty, duty-free and outlet businesses. The E-Mart division solidified its position in the lifestyle sector, encompassing Starfield, Starbucks, convenience stores and supermarkets.

Shinsegae Group deemed this year to be the right time to initiate the long-prepared separation, as it sees profitability improvements and a successful turnaround in its core businesses.

"The group has been carefully preparing a balanced division of resources and personnel, equally split between the two leaders, for decades," a Shinsegae official said. "While there may not be immediate changes in management direction, as each has been leading their division, there’s an optimistic view in general that the two core sectors will continue to build on their strengths more effectively from now on."

Since its separation from Samsung Group in 1997, Shinsegae has grown into Korea’s leading retail company, with its total sales exceeding 71 trillion won ($52 billion) in 2023.

During this time, the department stores developed significant competitiveness, while E-Mart emerged as Korea’s leading hypermarket with a network of 153 stores. Shinsegae established a strong presence in lifestyle sectors, with Shinsegae Department Store achieving record sales in the first half of this year.

Despite being on high alert, E-Mart is also experiencing profitability improvements, with operating profit rising by 51.9 billion won in the first half compared to last year and expected to return to 2020 levels annually.

The group underscored its commitment to a "reward-and-punishment" approach, focusing on promoting talent based on merit to fuel further growth. This reshuffle is particularly significant, as it represents the first personnel change since Chung Yong-jin’s appointment to the chair position.

Since Chung’s inauguration in March, Shinsegae has been enhancing profitability by reinforcing its core competitiveness through an emergency management system. This strategy will continue into 2025, with plans to place key talent in strategic roles to drive sustained growth.

By Kim Hae-yeon (hykim@heraldcorp.com)