Britain’s biggest retailer, Tesco-Lotus, has signaled a retreat from Thailand by starting a review of its remaining Asian businesses. This could result in a sale of their Thailand and Malaysian operations.
Tesco is five years into a UK-focused recovery plan launched by Chief Executive Dave Lewis. This came after an accounting scandal capped a dramatic downturn in trading.
In October Lewis declared Tesco’s turnaround complete and said he would step down next summer.
“Tesco confirms 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 in a statement on Sunday.
The company said the review was at an early stage and gave no details of the approaches received.
“No decisions concerning the future of Tesco Thailand or Malaysia have been taken. Also there can be no assurance that any transaction will be concluded,” it added.
Tesco trades from 1,967 stores in Thailand and 74 in Malaysia. In the six months to Aug. 24 the businesses together generated sales of 2.6 billion pounds ($3.3 billion). Up 1% at constant exchange rates, and operating profit of 171 million pounds, up 42.3%.
Tesco-Lotus placed Growth in Thailand
At a capital markets day in June, Tesco-Lotus had said it was well placed to grow in Asia. Particularly in Thailand, citing an opportunity for 750 new convenience stores over the “medium term”.
But under Lewis the focus of investment has been the UK. Spending nearly 4 billion pounds on the acquisition of wholesaler Booker last year.
In 2015 Tesco-Loyus sold its South Korean arm to a group led by private equity firm MBK Partners for $6.1 billion. A year later it sold its Kipa business in Turkey to Migros. The country’s largest supermarket chain.
Under its previous management Tesco consequently made costly exits from Japan, the United States and China.
If Tesco-Loyus does quit Thailand and Malaysia, its only overseas operations, will be its loss-making central European division. Consisting of stores in the Czech Republic, Hungary, Poland and Slovakia.
Lewis is to be succeeded therefore by Ken Murphy, a former executive at healthcare group Walgreens Boots Alliance (WBA.O), at a date yet to be confirmed.
Shares in Tesco closed at 232.2 pence on Friday, hence valuing the business at 22.8 billion pounds.