British supermarket chain Tesco to sell its Polish branch to Salling Group A/S
Sunday, June 21, 2020
On Thursday, UK-based retailer Tesco and Denmark-based retailer announced their agreement over selling a large portion of Tesco's Polish operation to Salling Group. Tesco stated its intention to leave the Polish market altogether, Salling its intention to strengthen its chain in Poland.
The deal covers 301 stores, two distribution centers and the head office. With the acquisition Salling said it seeks to improve its coverage in Southern Poland and, over 18 months at a cost of one billion, intends to merge these stores into its currently 386 strong . Salling also takes over about 7000 employees from Tesco — Netto Poland currently has about 5000 employees. Tesco continues to run 19 stores, which were not included in this package.
The sale price, to be payed in cash, is 900 million złotys (181 million). In the 2019/20 fiscal year, Tesco said its Polish branch had a 24 million pounds operating loss with a 1368 million pounds ; to which the sold units contributed with a 947 million pounds turnover for a 107 million loss. At fiscal year-end, the sold units held a value of 681 million pounds in the books.
, the Polish anti-monopoly agency, has to approve the deal. The parties said they expect a decision this year.
Tesco has suffered losses from its Polish operation for several years, as customer preference has shifted away from, Tesco's preferred store size, to smaller discount stores like and . The , introduced in 2018, also hurt sales. According to Notes from Poland (NFP), some discount stores resorted to offer postal services, a loophole which allows Sunday opening hours.
In 2015, Tesco centralized its management in the Central European region, comprising Czechia, Hungary, Poland, and Slovakia, but reverted the decision later on. At the time, the company invested in e-commerce and started home deliveries, but reports only 0.5% of Polish grocery turnover comes from this segment, compared to 7% in the United Kingdom.
In the past few years, Tesco Polska has cut expenditures by streamlining its product range, halving its staff, shutting off home deliveries in parts of the country, and closing off stores, reportedly including last year itsdistribution center. (DW) reported in mid-2019, 62 Tesco outlets had closed within a year. Staff layoffs left meat, fish and delicatessen departments without designated shop assistants, and forced staff canteen closures and administration simplifications.
Tesco sold its roughly 2000 Thai and 74 Malaysian stores to in March; announced leaving its joint venture with in February; and in 2015 sold its South Korean chain . Speaking to , Matt Simister, Tesco’s CEO for Central Europe, explained that the company held a 4% share of the Polish retail market, compared to its 16% share in Hungary, and stated they want to stay in Hungary. In a DW report in March of last year, , CEO of Tesco, stated they did not have intentions of leaving Thailand or Poland.
Tesco's Polish operation, according toin March, is too big for a single monolithic sale. The chain's press release reported 22 sold units in the past year and a half, for around 200 million pounds. NFP named the chain and property developer among the buyers.
Both Tesco and Salling entered the Polish market in 1995.
- "Tesco agrees sale of business in Poland" — , June 18, 2020
- "Salling Group acquires Tesco Poland" — , June 18, 2020
- Nagy Viktor. "Kivonul a Tesco Lengyelországból, Magyarországon mi várható?" — , June 18, 2020 ()
- Maria Wilczek. "Not Tesco’s finest: why the British supermarket giant is withdrawing from Poland" — , March 12, 2020
- John Reed, Jonathan Eley. "Tesco agrees $10.6bn sale of Thai and Malaysian operations" — , March 9, 2020
- (UK retailer Tesco mulls pulling out of Poland: report" — , October 3, 2019). "
- Jo Harper. "British retailer Tesco scales down in Poland" — , May 31, 2019