Daegu Department Store transferred its controlling stake to investment firms Saekyung Invest and Aram Korea on the 16th, ending the founding family's control over the region's last remaining local department store chain. Chairman Koo Jung-mo, who represents the second generation of family leadership since founder Koo Bon-heung established the business in 1969, agreed to sell 2,795,743 shares representing 25.8% of the company. The ownership change follows years of declining performance after major retail chains entered the Daegu market starting in 2003, culminating in the closure of the main store in 2021 after 52 years of operation. Industry observers are monitoring whether this transaction signals a similar fate to Donga Department Store, which was sold to E-Land Group in 2010 and eventually closed its main location in 2019. The transfer represents the latest consolidation in South Korea's regional department store sector, where local chains have struggled to compete against national retail conglomerates.
Daegu Department Store Records Peak Performance in 2001-2002
Daegu Department Store achieved its highest sales performance in 2001-2002, recording 690 billion won in revenue, 88 billion won in operating profit, and 41.3 billion won in net profit. The company was founded in 1969 when it opened a 10-story department store in Daegu Jung-gu Dongseong-ro. The retailer introduced the country's first fixed-price sales system and became the first regional department store to implement a credit sales system. Founder Koo Bon-heung received the Silver Tower Order of Industrial Service Merit, the first such honor awarded in the distribution industry, in recognition of these innovations. The company opened Daegu Department Store Plaza in 1993 and launched "Daebak Mall," the first online shopping platform among regional department stores, in 1999.
Major Retail Chains Enter Daegu Market After 2003
Daegu Department Store's sales declined after 2003 when major retail chains began opening locations in the city. Lotte Department Store opened its Daegu branch in 2003, followed by Hyundai Department Store and Shinsegae Department Store. The expansion of these national chains dispersed the local shopping district. Daebak Outlet Dongdaegu, which opened in 2017, closed after operating for 1 year and 5 months. Hyundai Department Store Group subsequently leased the location for 10 years and reopened it as Hyundai Outlet Daegu.
Main Store Closes in 2021 After 52 Years
The Daegu Department Store main store closed in 2021 after 52 years of operation. The facility consisted of one basement level and 11 above-ground floors on a land area of 8,156 square meters, housing 250 brands. The company pursued the sale of idle assets including the main store, outlet, and distribution center as part of business normalization efforts. In 2022, Daegu Department Store attempted to sell the main store and land to JH&V Holdings for 212.5 billion won, but the transaction fell through due to unpaid balance.
Saekyung Invest and Aram Korea Acquire Controlling Stake
Daegu Department Store disclosed the "Execution of Share Purchase Agreement Involving Change of Largest Shareholder" through the electronic disclosure system on the 16th. The agreement transfers 2,795,743 shares out of 3,532,063 shares (32.64% of total shares) held by Chairman Koo Jung-mo and others to Saekyung Invest and Aram Korea, making them the new largest shareholders with 25.8% of total shares. A company representative stated, "The disclosure was made this morning because the decision was finalized after the disclosure deadline yesterday. As this was a contract decided by the major shareholder personally, information about the acquiring company is limited." The representative added that the acquiring entities are described as investment and development companies or asset development companies.
Industry Observers Compare Transaction to Donga Department Store Sale
Industry observers expressed concerns about whether Daegu Department Store will follow the trajectory of Donga Department Store. Donga Department Store, operated by Hwaseong Industries for over 30 years, once thrived alongside Daegu Department Store as one of the region's two major local department stores before being sold to E-Land Group for 268 billion won in 2010. The store was renamed Donga Outlet and continued operations until closing its main location in 2019, leaving only the Donga Department Store shopping branch. An industry source stated, "Unlike the Donga Department Store case where the entire company was transferred, this change in Daegu Department Store's largest shareholder does not mean the store will close immediately. However, since there is limited information beyond the fact that the buyer is an investment-related company, we are paying attention to and monitoring related developments." A Daegu Department Store representative stated, "The department store business is expected to continue as is, and the sale of idle assets is likely to proceed. If [the buyers] are investment development or asset development companies, there is also a possibility they will directly develop the main store rather than selling the idle assets."
FAQ
What percentage of Daegu Department Store did Saekyung Invest and Aram Korea acquire?
Saekyung Invest and Aram Korea acquired 2,795,743 shares representing 25.8% of Daegu Department Store, making them the new largest shareholders. The shares were transferred from Chairman Koo Jung-mo and other existing shareholders.
When did Daegu Department Store achieve its peak sales performance?
Daegu Department Store recorded its highest sales performance in 2001-2002, with 690 billion won in revenue, 88 billion won in operating profit, and 41.3 billion won in net profit.
