Tesco Mulls Selling Central European Operations to Sharpen UK Market Focus

Tesco is weighing a sale of its operations in Hungary, the Czech Republic and Slovakia, a decision it may announce to shareholders later this week. German discount retailer Lidl is reported to be among the interested parties. The divestiture would mark the latest step in Tesco’s retreat from overseas markets after previous exits from France, Japan, Malaysia, Poland, South Korea, Thailand, Turkey and the United States.

Chief executive Ken Murphy described the European division as an integral part of the group, yet sees a sale as a way to streamline the business and redeploy capital to the UK and Ireland where growth prospects are stronger. Analysts stress the importance of securing a fair price, warning that the asset could be sold too cheaply, but acknowledge the strategic logic of focusing on the domestic market. The move could intensify competition among UK rivals such as Sainsbury’s, Asda and Morrisons, which are still coping with debt from private-equity takeovers.