Tesco sells Polish business for £165m due to ‘market challenges’
Tesco has announced it will sell its struggling Polish operation for 819m zlotys (£164.6m), as the British supermarket giant seeks to streamline its presence across Central Europe.
In a statement this morning, the big four supermarket chain said it will sell Tesco Polska’s 301 stores and associated distribution centres to Salling Group A/S, subject to regulatory approval.
Danish firm Salling Group A/S serves 11m customers every week across Germany, Poland and Denmark, with an annual turnover of around £7bn.
Chief executive Dave Lewis said the sale of Tesco’s Polish arm would allow the supermarket chain to streamline its businesses in the Czech Republic, Hungary and Slovakia, where it has better growth prospects. “We have seen significant progress in our business in Central Europe, but continue to see market challenges in Poland,” he said.
Tesco Polska made sales of £1.4bn in the year ended 29 February, but reported an operating loss of £24m. Tesco has been seeking to offload its Polish arm for the last 18 months, and has already sold or agreed to sell 22 stores in the region for around £200m.
In its last set of full year numbers, the business in Central Europe saw a 12 per cent decline in sales, and a 29.4 per cent decline in profits, largely due to a £220m write down with respect to its Polish business.
Lewis, who is set to leave the retailer in October after six years at the job, in March agreed a deal to sell its supermarket arms in Thailand and Malaysia.
The £8.2bn sale was one of many recent changes made by the retailer to cut debt and slim down operations. Tesco’s retreat from Poland is a further shy away from the supermarket chain’s once global ambitions.
But despite its international retreat, the grocer has managed to weathered the storm of coronavirus within the UK. In April, Tesco hire 4,000 new drivers and 12,000 stock pickers and extended its opening hours in a bid to expand its weight in the online delivery market.
Last month, Tesco reached its target of 1.2m home delivery and click and collect slots each week.
Amisha Chohan, equity research analyst at Quilter Cheviot, said: “Tesco’s Poland business had been struggling for a number of years in a challenging market. The sale allows management to re-focus on core markets including the Czech Republic, Hungary and Slovakia, where they have stronger market positions with good growth prospects.”
Shares were up 1.2 per cent at 229.6p on the news at 8.45am.