No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Tesco is reportedly exploring a sale of its central and eastern European operations.
According to the Financial Times, citing people close to the situation, the supermarket retailer is working with bankers on options for its operations in Hungary, the Czech Republic and Slovakia, which employ more than 22,000 people. A sale of the business would end Tesco's ambitions outside the UK and Ireland, which included a failed attempt to build a new supermarket chain from scratch in the US.
Launched in Hungary in 1995, the central and eastern European business is Tesco's only remaining sizeable operation outside the UK and Ireland, after it sold off most of its international empire in a series of deals since a 2014 accounting scandal. The sell-off included the 4.2bn disposal of its South Korean Homeplus business in 2015 followed by the 8bn sale of its Thailand and Malaysia unit in 2020.
Tesco had already shut its lossmaking US Fresh & Easy venture in 2013, costing shareholders more than 1bn. Tesco told the FT: "We never comment on rumour or speculation."
Tesco has 561 stores across Hungary, the Czech Republic and Slovakia, according to its latest annual report. Its European division reported 4.5bn of revenues last year but generated only 115m of the group's 3.2bn in adjusted operating profit, the FT said. Tesco reported group revenues of 66.6bn.
Tesco shares closed up 0.5% at 472.20p.
Dan Coatsworth, head of markets at AJ Bell, said: "Reports suggest Tesco might sell its mainland European operations. Tesco has put its heart and soul into defending its UK market-leading position and everything else has played second fiddle.
"Part of the strategy has been to retreat from non-core operations such as financial services, and reducing its international presence would also make sense. Many UK companies have failed to replicate their success overseas and Tesco is one of them.
"Having already exited the US and Asia, Tesco's mainland European arm has washed its face but isn't strategically significant. Losing it from the group would be a simple cleaning up exercise rather than something that moves the needle."
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.