Shinsegae Chairperson Chung Yu-kyung, left, and Shinsegae Group Chairman Chung Yong-jin / Courtesy of Shinsegae Group

The nation's retail giant Shinsegae Group announced a structural revamp, Wednesday, splitting its flagship retail business into two separate entities — Emart and Shinsegae Department Store — formalizing the sibling leadership that has long been part of the founding family's succession plan.

According to the conglomerate, Chung Yu-kyung, the president of Shinsegae, has been appointed to chair the group's department store division, while her older brother and group chairman Chung Yong-jin will oversee the supermarket division.

Industry officials speculate that Chung Yu-kyung's promotion, part of the group's recent leadership reshuffle across key subsidiaries, may pave the way for Shinsegae Group's complete legal separation of Shinsegae and Emart as individual entities in the future.

The group's latest change of management was executed by the group's General Chairperson Lee Myung-hee, the siblings' mother and daughter of the group's founder Lee Byung-chul. Following the reshuffle of over 70 group officials, Shinsegae Group said Chung Yu-kyung's promotion is a "foundation" for dividing the group's entire businesses under the two companies in the future, while strengthening her leadership.

"We will shape our future growth around our two pillars: department stores and Emart," a group official said, adding, "Our latest managerial reshuffle will lead to a stable and effective legal separation of the two companies."

The group stated it has been organizing its operations under the two companies since 2019 to prepare for the split. Since then, Shinsegae has overseen the group's department stores, duty-free shops, outlets, fashion, beauty and home decor operations. Meanwhile, Emart has strengthened its management over the discount store chain, entertainment complex chain Starfield, Starbucks Korea, convenience stores, online shopping platform and construction division.

The promotion and newly established two-pronged leadership structure come at an ideal time, as both holding companies reported soaring sales this year, according to the group. Emart, which achieved 29.5 trillion won ($21.4 billion) in sales last year across its more than 150 discount stores nationwide, saw its earnings in the first half of this year increase by 51.9 billion won ($37.7 million) compared to the previous year, with operational profit expected to recover to near 2020 levels, the group added.

Shinsegae Department Store's main branch in downtown Seoul, Wednesday / Yonhap

Shinsegae achieved 6.35 trillion won in sales in 2023 and reported record revenues so far this year, approximately double the amount from 2015, when Chung Yu-kyung became president.

"We've decided to start our group separation initiative this year as we saw a successful turnaround from our holding companies in profit-building and strengthening competitiveness," the group said.

"By no longer delaying her promotion, we anticipate the two holding companies will each see faster growth. The reshuffle is also the first since Chung Yong-jin was promoted from the group's vice chairman in last March."

Finalizing the legal separation of the two holding companies requires the settlement of Lee Myung-hee's stakes in both firms. Currently, Chung Yong-jin holds 18.6 percent of Emart, while Chung Yu-kyung owns 18.6 percent of Shinsegae, and Lee retains 10 percent of both companies. A group official stated that there are "currently no plans on how to allocate the chairperson's stakes to her children."

"Now that the group has effectively been split in two, the remaining question is how and when the general chairperson will transfer her stakes," an industry official said.

In addition to the future settlement of Lee's stakes, the separation of Shinsegae and Emart must be approved by the Fair Trade Commission, the country's top antitrust body. Industry observers speculate that the legal process of assessing the chaebol family's business backgrounds will take at least two years.

Shinsegae Group announced its plan to separate from Samsung Group in 1991 and completed the process in 1997, in accordance with the Monopoly Regulation and Fair Trade Act. Ranked as the 11th largest Korean conglomerate since last year, the group currently holds total assets valued at over 62 trillion won.