Tesco Plc is exploring the sale of its Central and Eastern European operations to further reduce its debt, according to individuals familiar with the matter. This consideration comes after the company announced the sale of its South Korean business. The Central and Eastern European business, valued by Sanford C. Bernstein at £1.9 billion (approximately $2.9 billion), comprises over 1,110 stores and generates £6.45 billion in revenue.
Analysts note that compared to its Asian operations, Tesco's stores in Hungary, Poland, the Czech Republic, Slovakia, and Turkey are less attractive to potential buyers. Sales in these regions have declined for three consecutive years due to intense competition from discounters like Germany's Aldi. Bryan Roberts, an analyst with Kantar Retail, stated that Tesco has been significantly impacted by these discounters in the region.
Despite the challenges, Tesco's chief executive officer, Dave Lewis, is determined to strengthen the company's finances and regain an investment-grade credit rating. The sale of its South Korean business reduced its total borrowings by £4.23 billion but still represents less than a fifth of the retailer's overall debt. Tesco is also looking into options for its Dunnhumby data-analytics unit, and a potential sale of its Thai business, with over 1,700 stores, could bring in more than £4 billion, as estimated by Exane BNP Paribas analyst John Kershaw.
