E-Mart Inc., a retail unit under South Korean conglomerate Shinsegae Group, is expected to see its earnings improve this year, led by stellar performance of its warehouse store Traders and online shopping mall business.

E-Mart had struggled over the past several years due to an overall slowdown in the growth of hypermarkets in the country and weak earnings of its consolidated subsidiaries. In 2012, sales of hypermarkets in Korea increased 5 percent from a year ago, but the growth rate fell to 1.8 percent last year amid overall slowdown in the industry. Its market share was dragged down from 31.5 percent in 2012 to 28.7 percent in 2014.

The retail giant also suffered from sluggish sales in its subsidiaries. Deficit of Everyday Retail Inc., an operator of super supermarkets (SSM), ballooned from 1 billion won in 2014 to 10 billion won last year because of the stagnant supermarket sector. The conglomerate’s With Me convenience store also saw its losses jump from 14 billion won to 26 billion won over the same period after the convenience store made aggressive investment to expand the number of stores to vie with other rivals.

Losses at Shinsegae Chosun Hotel Co., a duty free operator under Shinsegae Group, also widened from 16 billion won in 2014 to 38 billion won last year following its business expansion at Incheon International Airport. The conglomerate’s overseas business including that in China has failed to turn around, incurring a loss of 35 billion won.

The business prospect for E-Mart and its subsidiaries, however, is bright this year as sales in relatively new businesses such as warehouse store Traders like Costco and online-based E-Mart Mall are on the rise.

Sales in Traders armed with price competitiveness have been growing at a double-digit rate on the back of an increase in the number of stores. Sales of Traders increased 19.6 percent in 2014 from a year ago and 28 percent in 2015. Traders is expected to raise 30 percent more sales this year than last year, according to market analysts. The conglomerate plans to invest more than 1 trillion won in Traders and half of it is expected to be spent on securing sites for new stores.

Shinsegae Group’s E-Mart Mall should also provide a boost to the overall earnings of E-Mart. Last year, sales of the online mall jumped 20 percent from the previous year, thanks to its new SSG shopping portal marketing scheme that has helped add the number of online mall new subscribers 28 percent in January and February from the same period last year and mobile sales 66 percent, according to an unnamed official at E-Mart.

Sales of E-Mart Mall are forecast to rise up to 50 percent on-year from the third quarter onwards, following the opening of its new distribution center in Gimpo, western Seoul, dedicated to its online mall. Kim Yoon-sup, manager at E-Mart, said that the new logistics center slated to start operations in the third quarter will run on an automatic system, which allows three to four times more efficiency compared to the previous offline store distribution system.

In 2016, sales of E-Mart Mall are estimated to reach 892 billion won, up 34.6 percent from the previous year, and the online mall is anticipated to reach a break-even point in the fourth quarter of this year.

Nam Sung-hyun, an analyst at Kiwoom Securities Co., said that there is much potential for the online mall to grow as its services and products are hardly overlap with those of the offline E-Mart stores.

Overall sales of E-Mart’s subsidiaries are expected to improve as well. Last year, Shinsegae Food Co. completed the construction of a facility in Eumseong, North Chungcheong Province, and it is projected to see a rise in sales based on the additional production line of home meal replacements (HMR). Industry analysts note that the company will see an improvement in growth and profitability based on increased supply and product diversification following a rise in the overall operation rate.

Business conditions for With Me convenience stores are also anticipated to improve. The company estimates that it needs at least 2,000 stores to reach its break-even point. Currently, there are 1,170 With Me convenience stores across the country, including 500 stores that opened last year. In 2016, the company has plans to open more stores than last year.

By Noh Hyun

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