SEOUL-- South Korean retail giant Shinsegae will run its department store west of Seoul until next year as the company has reached an agreement with its rival Lotte, the two conglomerates said Wednesday, ending the five-year feud over the business rights of the outlet.
The two retailers have been in talks after the Supreme Court ruled in favor of the country's fifth-largest business group Lotte over its acquisition of land in Incheon from the city government in 2012 earlier this month.
"The two companies have agreed on Shinsegae operating the department store at the Incheon terminal for one additional year until Dec. 31, 2018, and for Lotte to take it over afterwards," they said in a joint statement.
The battle between the two rivals began after Lotte signed a 900 billion-won (US$836.4 million) deal with Incheon city to take over its 77,800-square-meter transit terminal in which Shinsegae has been running its department store for the past two decades. The branch is Shinsegae's fourth largest, with an annual revenue of over 800 billion won.
Shinsegae's original lease contract with Incheon city ends this year, but it had a separate rental agreement with the city for part of the outlet it extended in 2011 and cost the firm 145 billion won. The lease for the extended area, which accounts for 27 percent of the total store, is valid until 2031.
Shinsegae has accused Lotte and the city government of infringing on its lease rights and putting its business in jeopardy, claiming that if Lotte were to take over the land ownership, it would be impossible for the company to continue running the branch, as the rest of the complex would be filled with Lotte stores.
Under the latest deal, Shinsegae agreed to hand over the new segment of the store to Lotte 13 years earlier than the originally promised year of 2031, they said.
"We had shared views on minimizing the anxiety and inconvenience of our customers, subcontract workers and partner firms, and normalizing the operation of the department store as soon as possible," they added in the statement.
The two companies will now proceed with an evaluation of their operating losses and lease rights for further negotiations.
Source: Yonhap News Agency