Turnaround, despite its theoretical and practical importance, has not been an actively researched area. Studies conducted abroad have analyzed turnarounds from various perspectives and have yet to present a consistent theory. This study integrated existing research and introduced important variables that were overlooked in prior studies. Additionally, this study conducted a case study of a regional department store that recorded steady profits for several years under court receivership and recently experienced a significant increase in profit margins. The case study provided a descriptive account of the causes of performance deterioration and the case firm's response measures through an in-depth analysis of the process from founding to the current point at which it escaped its worst state and returned to profitability. An analysis based on turnaround theory was attempted for each phenomenon that emerged during this process, and through an examination of phenomena insufficiently explained by existing theories, a foundation for theory appropriate to the Korean context was established. The research results showed that the case firm went through stages of securing stakeholder support, retrenchment, refocusing, and cost structure improvement in a repetitive rather than linear manner. Furthermore, the case firm addressed its three causes of decline—absence of strategy, a bureaucratic structure inappropriate for a small department store, and excessive interest costs—through three methods: implementation of a focused differentiation strategy, transformation to an organizational structure approximating a simple structure, and debt burden reduction through court receivership. This study particularly demonstrates the importance of intra- and extra-organizational political dynamics that emerge during the turnaround process.