(LEAD) Emart Q2 losses widen after Starbucks controversy

Seoul, Aug. 13 (Yonhap) -- Emart Inc., South Korea's largest discount retailer, reported a widening net loss of 136.8 billion won in the second quarter due to a contentious promotion by its Starbucks affiliate, SCK. The company's net loss for the period, ending June, more than tripled from 31.4 billion won in the same quarter last year.

Equity-method losses from SCK were a key factor in the earnings decline. Emart, a Shinsegae Group unit, also shifted to an operating loss of 43 billion won, compared to a profit of 21.6 billion won a year earlier. Sales dropped 1.8% to 6.91 trillion won, falling from 7.03 trillion won. SCK's operating loss widened to 18.4 billion won in the quarter following a controversial "Tank Day" promotion on May 18, the anniversary of the 1980 Gwangju pro-democracy uprising.

The promotion was halted after public outcry over the term "tank" triggering memories of military suppression of demonstrators during the uprising. Starbuck's U.S. headquarters and the Gwangju incident's chairman Chung Yong-jin apologized for the promotion. SCK subsequently closed all stores nationwide for employee training on June 22 to improve historical awareness and social sensitivity.