Leadership1 publisherNot yet confirmed elsewhere3 min readPublished
Tesco weighs a central European sale that would end its overseas expansion
Tesco is weighing a sale of its Hungarian, Czech and Slovak arm, £4.5bn of its £66.6bn revenue last year, with Lidl among the interested parties. A sale would end its overseas expansion and free money and attention for a UK market where its share has recently slipped.
The Board Room · Leadership desk
What happened
- Tesco could confirm the move when it updates shareholders on Thursday, City AM reported.
- The company has already withdrawn from France, Japan, Malaysia, Poland, South Korea, Thailand, Turkey and the United States.
- Its Thai and Malaysian businesses were sold for £8bn in 2020.
- Shares fell 3 per cent in one day in July when Tesco said sales growth had slowed to 1 per cent.
- A reported bid for Majestic Wines would be Tesco's first takeover since it bought the wholesaler Booker for £3.7bn in 2017.
Compiled by The Board RoomSomething wrong?How this is made
Why it matters
- contradiction A confirmed sale would reverse Ken Murphy's recent description of the division as an integral part of the group, so investors will judge it on the reasons and the price he gives.
- constraint After a sale, the roughly 93 per cent of revenue outside the division would carry all future growth, so Tesco would have to win customers from home rivals or buy businesses at home.
- exposure Asda and Morrisons, both carrying heavy debt after private equity takeovers, would have the least room to respond if Tesco spends the freed capital on UK prices and stores.
Central Europe is a small part of the group Tesco has become. The division's revenue last year was about 6.8 per cent of the total [17]. In 2007 overseas markets supplied 27 per cent, and Tesco wanted that above half within a decade [3]. "We keep looking at everywhere," Sir Terry Leahy, then chief executive, told The Times, naming India and even Russia as possible targets [4]. "We are on the threshold of becoming one of the few successful international retailers. There's plenty to do." [4]
The retreat has been running for more than a decade. Tesco sold its remaining Fresh & Easy stores and left the US in 2013 [6]. The accounting scandal that nearly sank the company in 2014 sped up its turn back home [6].
"A disposal would simplify the group, sharpen management focus and free up capital for the UK and Ireland, where the potential returns are likely to be greater," Nicholas Found, an analyst at Retail Economics, told City AM [9]. He named the risk in the next breath: "The danger is selling a good asset too cheaply. Tesco has no pressing need to exit, so Ken Murphy can afford to be highly disciplined on valuation." [10]
The weakness investors are watching is at home. In the quarter ending in September, Tesco's UK market share fell 0.3 points to 27.8 per cent, down from 28.1 per cent, on Worldpanel by Numerator's figures [11] [18]. City AM reports that analysts put the stall down to the recovery of Marks & Spencer Food and Co-op, both hit by cyber attacks a year earlier [12]. "Interestingly, more recent market share has been surprisingly brittle. My view is this is a small blip," said Richard Hyman, an independent retail analyst, adding that Tesco needed to explain "how and why it's going to return to positive territory soon." [15]
A sale abroad does nothing about that cause. A disposal does not touch the M&S and Co-op recovery. It does release cash and management time, and both can go into a UK contest where Tesco's share is more than 10 per cent clear of Sainsbury's, according to City AM [8]. Hyman said a disposal "clearly makes sense. The gradual divestment of its overseas businesses has allowed it to fully focus on the core domestic business." [15] I'd expect any extra pressure on rivals to depend on where the proceeds go.
What Tesco has to decide now is the price it will accept. A sale would leave the group with no business outside the UK and Ireland to offset a weak run at home [9]. City AM did not report a price, and Tesco has not said how it would use any proceeds. In 2007 the company took nearly £1 in every £3 spent at UK checkouts [14].
What to watch
- Whether a buyer and a price are named for the Hungarian, Czech and Slovak stores, and whether Lidl is that buyer.
- How Tesco says it would use any proceeds, including whether the Majestic Wines interest becomes a bid.
- The next Worldpanel by Numerator share figures, which will show whether the slip to 27.8 per cent was the small blip Richard Hyman expects.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence40
- Adoption
- Insufficient
- Hype gap+15
- Incentives
- Insufficient
- Confidence40
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Tesco, the UK's largest supermarket chain, is weighing whether to offload its operations in Hungary, the Czech Republic and Slovakia, with grocery rival Lidl among the interested parties.
- [2]
Tesco's European division accounted for £4.5bn of its £66.6bn total revenue last year.
- [3]
In 2007 Tesco hoped to generate more than half of its annual revenue from overseas markets within the following decade, nearly double the 27 per cent it achieved at the time.
- [4]
"We keep looking at everywhere," Sir Terry Leahy told The Times, naming India and even Russia as potential targets. "We are on the threshold of becoming one of the few successful international retailers. There's plenty to do."
ReportedSupportedSource: Sir Terry Leahy, then Tesco chief executive, quoted by City AM from The TimesView cited source - [5]
Tesco has already withdrawn from France, Japan, Malaysia, Poland, South Korea, Thailand, Turkey and America.
- [6]
Tesco quit its US experiment in 2013, selling off all remaining Fresh & Easy stores, and the accounting scandal that nearly sunk the firm accelerated its turn inwards in 2014.
- [7]
Tesco's Thai and Malaysian operations were sold for £8bn in 2020.
- [8]
Tesco's UK market share is more than 10 per cent clear of its closest rival, Sainsbury's.
- [9]
"A disposal would simplify the group, sharpen management focus and free up capital for the UK and Ireland, where the potential returns are likely to be greater," said Nicholas Found, analyst at Retail Economics, who said a sale would have "strategic logic at the right price".
- [10]
"The danger is selling a good asset too cheaply. Tesco has no pressing need to exit, so Ken Murphy can afford to be highly disciplined on valuation."
- [11]
Tesco's market share dipped from 28.1 to 27.8 per cent in the three months to September, according to Worldpanel by Numerator, up from a low of 25.6 per cent in 2020.
- [12]
Analysts have blamed Tesco's recent lack of market share gains on the recoveries of Marks & Spencer Food and Co-op, which were both flailing after cyber attacks at this time last year.
- [13]
Tesco's shares slipped three per cent in one day in July, when the company revealed sales growth had slowed to one per cent.
- [14]
In its 2007 heyday Tesco accounted for nearly £1 in every £3 spent at the checkout tills.
- [15]
Richard Hyman said a disposal "clearly makes sense. The gradual divestment of its overseas businesses has allowed it to fully focus on the core domestic business." He added: "Interestingly, more recent market share has been surprisingly brittle. My view is this is a small blip" and said Tesco needed to reassure investors on "how and why it's going to return to positive territory soon."
- [16]
Chief executive Ken Murphy recently described the European division as an "integral part of the group".
- [17]
The European division was about 6.8 per cent of Tesco's revenue last year.
- [18]
Tesco's market share fell 0.3 percentage points in the three months to September.
- [19]
Revenue outside the European division was about 93 per cent of Tesco's total last year.
- [20]
Tesco could confirm the retreat from Europe when it updates shareholders on Thursday.
- [21]
Tesco is reportedly weighing up a bid for wine retailer Majestic Wines, which would be its first takeover move since it bought wholesaler Booker for £3.7bn in 2017.
- [22]
Sainsbury's appears rock solid in second place by market share, but Tesco's renewed focus on the UK could cause alarm for Asda and Morrisons, which have both struggled with hefty debt piles following private equity takeovers.
Sources
1 independent publisher whose own reporting we read for this story.
- cityam.comCould an exit from Europe bolster Tesco’s UK dominance?
1 article · October 6, 2026
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