SEOUL, KOREA - E-Land World and E-Land Retail, the core units of E-Land Group, have been consistently assessed at the "BBB+" rating since 2010. Despite the rapid increase in sales revenue and operating profit, it has been unable to get out of the not-so-impressive credit rating that institutional investors try to avoid for years.
E-Land World, the unit sitting at the top of the whole group's governance structure, posted consolidated sales revenue of 6,177.2 billion won and operating profit of 456.5 billion won. Its operating profit ratio is 8.5 percent, much higher than that of Lotte Shopping (5.3%) and E-Mart (5.6%). During the first half of this year, it earned 313.4 billion won in operating profit in a situation where all other retailers suffered a setback.
It was largely thanks to the stable growth of its domestic retail business including the fashion unit, New Core Outlet, and 2001 Outlet. The group as a whole is currently running 55 stores including department stores and discount stores. The number of fashion brands under its control is more than 30.
Still, it is spending more than it earns because of the aggressive expansion strategy. According to data released by Korea Ratings, the total expenditure by E-Land World last year on investment was 905.1 billion won. In the first half of the year, it again spent 207.5 billion won. Due to excessively aggressive investment, its free cash flow has been in deficit for the past five years.
Article provided by The Korea Economic Daily
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