Key facts
- Tesco is exploring the sale of its central European operations in the Czech Republic, Hungary, and Slovakia.
- The UK's largest supermarket chain has hired advisers to explore options for its remaining overseas assets.
- Tesco's international expansion, once envisioned to generate half of its revenues from overseas, has largely been unwound.
- The company's US venture, Fresh & Easy, resulted in a write-off of over £1 billion.
- Tesco's European stores contributed less than 4% of its adjusted operating profit in the past financial year.
- Tesco's UK market share stands at 28.2%, with a target of 30%.
Tesco, once a global retail aspirant, is reportedly exploring the sale of its remaining operations in central Europe, comprising 560 stores across the Czech Republic, Hungary, and Slovakia. This move signifies a decisive shift towards concentrating on its domestic UK market after a series of international divestments over the past decade.
In 2007, then-chief executive Sir Terry Leahy envisioned Tesco becoming a dominant global retailer, predicting that half of its revenues would come from overseas within a decade. However, this ambition was hampered by several setbacks. The US venture, Fresh & Easy, proved to be a costly failure, resulting in a write-off exceeding £1 billion. A significant accounting scandal in 2014 also forced management to refocus internally.
Subsequent years saw Tesco exit various markets: South Korea in 2015, Turkey in 2016, Poland and China in 2020, and its substantial Asian operations in Thailand and Malaysia for £8 billion in the same year. The company's European stores currently contribute less than 4% of its adjusted operating profit, according to Alex Rowberry, senior insight analyst at IGD. This suggests a strategic decision to prioritize growth areas such as online grocery, rapid delivery, and digital services over geographic expansion.
Analysts suggest that the sale of these central European assets would allow Tesco to further simplify its strategy and free up resources. The company has seen its UK market share rise to 28.2%, with a stated internal target of 30%. The acquisition of Booker for £3.7 billion in 2018 has also strengthened its position in the UK wholesale market. Shareholders have benefited from this strategic refocusing, with the company's share price doubling in the past five years.