Tesco, the UK's largest retailer, is reportedly exploring the sale of its Central European operations, following previous divestments in Turkey and the US. This strategic move aligns with the company's broader focus on its core markets in the UK and Ireland, as well as its wholesale business, Booker. The potential sale includes its businesses in the Czech Republic, Hungary, Poland, and Slovakia, where it has operated for nearly two decades.
The potential divestment comes as Tesco faces increasing competition and regulatory pressures in Central Europe. In its latest interim results for 2025/26, the Central Europe segment reported adjusted operating profit of £44 million, a decrease of £5 million year-on-year. This decline was attributed to targeted price investments to counter competitive pressures, lower rental income from sold mall properties, and ongoing regulatory challenges, particularly in Slovakia. Despite these challenges, the region saw like-for-like sales growth of 3.4%, with food like-for-like sales up 4.0%.
This reorientation reflects Tesco's long-term strategy to simplify its international portfolio. The company has a history of shedding non-core assets, including its exit from the US market (Fresh & Easy) in 2013, which resulted in a $3.5 billion global writedown, and the sale of its Turkish business in 2016. Such divestments enable Tesco to allocate resources more effectively to its most profitable segments and improve overall financial performance, as evidenced by its current focus on driving market share gains in the UK and Ireland and improving cash flow generation, with free cash flow reaching £1,298 million, up 2.9% in the first half of 2025/26.
