Tesco Coming Back to Earth, Pulls Out Of Tough Polish Market
Brian Moore
Publisher: NamNews Retail news from the NAM perspective, with practical implications and action
Tesco has agreed to sell its underperforming business in Poland to Denmark’s Salling Group, citing ongoing “market challenges”.
The group stated that the deal worth ￡181m would allow it to focus on its other operations in central Europe (the Czech Republic, Hungary and Slovakia), which had better growth prospects and contributed more to the business.
Tesco has been selling loss-making stores in Poland over the last couple of years amid intense competition from the discounters and damaging changes to Sunday trading laws. The disposals have focused on larger hypermarkets in order to focus on better-performing smaller sites.
In its last financial year, the 301 stores in Poland being sold generated sales of ￡947m but made a pre-tax loss ￡107m.
Tesco opened its first supermarkets in Poland in 1995, with store numbers eventually peaking at 450 two decades later before the tide turned against the group.
The Salling Group operates stores across Germany, Poland and Denmark, with an annual turnover of approximately ￡7bn. All the stores acquired from Tesco will be rebranded to the Netto format during an 18-month transition period, added to Salling’s existing chain of 386 stores in the country. The deal also includes the associated distribution centres and head office in Kraków.
Dave Lewis, Tesco’s Chief Executive who is due to step down in October, said: “We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland.
“Today’s announcement allows us to focus in the region on our business in Czech Republic, Hungary and Slovakia, where we have stronger market positions with good growth prospects and achieve margins, cashflows and returns which are accretive to the group.”
Tesco stated that proceeds from the sale will be used for “general corporate purposes”.
The withdrawal from Poland follows the group’s ￡8.2bn sale of its operations in Thailand and Malaysia in March, and is a further retreat from its once lofty global ambitions.
NamNews Implications:
- Time for NAMs to realign terms with their Salling Group colleagues…
- re Germany, Poland and Denmark
- …before a request from Salling Group?
Technology leader with 20+ years of experience.
4 年Agreed Miles, CE business is now smaller and smaller. I can’t imagine it would make sense to continue with long term operations.
Publisher: NamNews Retail news from the NAM perspective, with practical implications and action
4 年Agreed, Miles, simpler all round...
Domain Architect (Corporate Systems) at New Look
4 年Only a matter of time before Tesco sells rest of CE operation to a regional player (there is business in Croatia that would be a fit for Hungary if not Czechia, Slovakia)