Tesco is five years into a recovery plan launched after an accounting scandal capped a dramatic downturn in trading.
LONDON (REUTERS) – Britain’s biggest supermarket chain Tesco said on Sunday (Dec 8) it had started a review of its businesses in Thailand and Malaysia, including looking at a possible sale.
Tesco said in a statement that “following inbound interest, 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.”
It said the evaluation was at an early stage and “there can be no assurance that any transaction will be concluded.”
“A further announcement will be made if and when appropriate,” Tesco added.
A sale could value those operations at up to US$9 billion (S$12.2 billion), The Wall Street Journal reported, quoting people with knowledge of the plans.
The Journal said that Tesco, one of the world’s largest grocers, is potentially working with an adviser for a sale of the assets. One of the people said that Tesco could start a sale process early next year.
Tesco Thailand launched in 1998 and has 1,967 stores, while the Malaysian business started in 2002 and has 74 stores, according to Bloomberg News. Together they account for almost a third of the group’s global network of around 6,270 stores. Tesco has said it was targeting rapid expansion in Thailand, with goals to build 750 express stores within three years.
Its total sales in Asia for the last fiscal year – where it operates Tesco Lotus in Thailand and Tesco hypermarkets and smaller Tesco Express convenience stores in Malaysia – were down 1.6 per cent last year, after excluding sales taxes and fuel. It said the company achieved £818 million (S$1.46 billion) in sales in Malaysia and £4.06 billion in Thailand, said Inside Retail Asia. Tesco Asia’s operating profit for the year slipped 4.3 per cent to £286 million, it added.
In its first half-year results published in October, Tesco said its Thailand and Malaysia operations reported combined sales of £2.6 billion, while operating profit jumped 54.1 per cent to £171 million, UK newspaper City A.M. reported.
In October, the company also announced that chief executive Dave Lewis will step down next year after leading a turnaround of the brand.
Tesco unveiled plans in August to cut 4,500 jobs across its 153 Metro stores in the UK. Industry data out last month showed showed all of Britain’s big four grocers – market leader Tesco, Sainsbury’s, Asda and Morrisons – losing market share to German-owned discounters Aldi and Lidl, who have been aggressively opening new stores.
With additional information from The Straits Times