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Kim Dong-sun, vice president of Hanwha Galleria [Yonhap News Agency photo]BizCheck=Hong Hye-yeon [Korea Newswire] Hanwha Galleria, under the leadership of Kim Dong-sun, who was once touted as the third-generation CEO of Hanwha Group, has fallen short of expectations with its performance last year.

According to the company's earnings report on Monday, its consolidated sales rose 23.9 percent to 538.3 billion won last year, but operating profit plummeted 68.1 percent to 3.1 billion won. The net loss was 18.8 billion won ($18.8 million), although this was down from a loss of 30.1 billion won the previous year.

The main reason for the decline in operating profit was a one-time expense of KRW 6.8 billion for a change in the minimum wage standard following a Supreme Court ruling. However, even excluding this, it is hard to avoid criticizing the overall decline in profitability.

Kim Dong-sun is the third son of Hanwha Group Chairman Kim Seung-yeon, who took the helm of Hanwha Galleria with a 16.85% stake in the company. He has been aggressively expanding his business, including the introduction of the American burger brand Five Guys in Korea and the acquisition of Hour Home through Hanwha Hotels & Resorts, but in the department store sector, his management ability has been questioned due to deteriorating profitability.

In particular, the acquisition of Our Home requires 70% of the acquisition funds to be raised externally, raising concerns that Hanwha Hotels' financial burden could increase in the short term. This has led to criticism that Kim is expanding too much in order to achieve short-term results.

“In the fourth quarter of last year, department store sales increased year-on-year, and sales in the F&B (food and beverage) sector, including Five Guys, have been steadily increasing,” said a Hanwha Galleria representative, adding, ”This year, we will focus on improving performance by strengthening competitiveness and reducing costs.”

However, the industry believes that this year's performance will have a major impact on the group's position in the future, as the poor performance has raised doubts about Kim Dong-sun's management ability.

By Hye-yeon Hong hongyang0427@naver.com