Tesco is considering selling 2000 Asian stores

Tesco is considering selling 2000 Asian stores
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Tesco is considering a sale of more than 2,000 of its stores in Thailand and Malaysia. The British supermarket chain has been approached by an, as yet, unknown party.

 

Looking at options

Tesco has confirmed in a statement that "it has commenced a review of the strategic options for its businesses in Thailand and Malaysia, including an evaluation of a possible sale of these businesses." The interested buyer would have a concrete interest in the Asian stores, The Guardian writes.

 

The British supermarket chain has 1,967 stores in Thailand (under the Tesco Lotus brand) and a further 74 in Malaysia, with a total of more than 60,000 employees. Together they generated a turnover of 4.9 billion pounds (5.8 billion euros) and a profit of 286 million pounds (340 million euros) in the last financial year.

 

A comfortable position

Clive Black, an analyst at Shore Capital, points to Tesco's leading market position in Thailand and the linked growth potential as a result of the country's increasing urbanisation. "It could go for a very high price, and it’s also the case that Tesco doesn’t need to sell." In June, however, CEO Dave Lewis talked about a possible growth expansion in Asia, including plans to open a further 750 convenience stores in Thailand. The group's Asian activities are not only growing faster than the European ones, they are also proving more profitable.

 

If it comes to a sale, Tesco will only be active in the United Kingdom, Ireland and Central Europe (Czechia, Hungary, Poland and Slovakia). Over recent years, the supermarket chain has already withdrawn from France, Japan, Turkey and the United States. In 2015, following the outbreak of an accounting scandal, the company also sold its South Korean operations for four billion pounds (five billion euros).

 

However, the proceeds of any sale could help Tesco to improve its profitability within the United Kingdom, where intense competition and the rise of e-commerce have led to restructuring. In August, the company announced that 4500 jobs would be lost in its British Tesco Metro stores, as part of wider cost-saving plans.