Key facts
- Tesco is reportedly considering selling its operations in Hungary, the Czech Republic, and Slovakia.
- The company has hired bankers to explore a potential sale.
- Tesco operates 566 stores across these three central European countries.
- The European business generated over £4.5 billion in revenue in the last fiscal year.
- This potential sale represents a shift from Tesco's previous international expansion strategy.
Tesco is reportedly in discussions to sell its business operations across central Europe, including Hungary, the Czech Republic, and Slovakia. The Financial Times reported that the UK supermarket giant has hired bankers to explore the possibility of divesting these assets.
The grocer operates a significant number of stores in the region, with 566 outlets across the three countries: 200 in Hungary, 184 in the Czech Republic, and 182 in Slovakia. In the year ending February, these markets generated over £4.5 billion in revenue, with Hungary and the Czech Republic each contributing £1.6 billion, and Slovakia £1.5 billion.
Despite the revenue figures, Tesco noted a 0.9 per cent decline in operating profit on a constant rate basis, attributing it to the sale of mall properties in the prior year and ongoing regulatory pressures. The company also recorded a £75 million write-down on one of its Slovakian stores due to "competitive intensity."
This potential move would mark a significant reversal for Tesco, as chief executive Ken Murphy had previously described the central European business as "an integral part of the group" and "a successful part of the group, and they don’t distract us very much from the core business."
Tesco has a history of international expansion and subsequent retrenchment. The company previously exited the US market in 2013 after the failure of its Fresh & Easy chain and left China in 2020. In its domestic market, Tesco holds a commanding 28.2 per cent share of the UK grocery market.