The chief executive of Tesco, Dave Lewis, has said that the group's decision to close stores across several Central European markets, as well as streamline its offering, has enabled it to achieve profitability in the region.
According to Tesco's full-year results, its Central Europe operations, located in Poland, Hungary, Czech Republic and Slovakia, posted a 56.3% increase in operating profit, to £186 million (€215.8 million), as a result of the group's efforts.
Commenting on the store closures, Lewis said, "It's part of the transformation that Matt and the team have been on for two years; we have announced these store closures, and executed them.
"If you include all the other changes, that gets us to a place in the second half of the year that Poland becomes a profitable business and completes the set for the group. But there's more that we can do to simplify our offering."
Store Count
The full year saw Tesco reduce its store count by 62 stores in Poland – more than 15% of its total portfolio – as well as by two stores in Hungary, one store in Czech Republic and one store in Slovakia.
Changes to Sunday trading regulations in Poland meant that there were 25 fewer trading days in the year, which the group said impacted like-for-like sales in the region by 1.3%. Overall, like-for-like sales in the region were down 2.3% for the full year.
As to whether Tesco may look to introduce a wider range of store formats, such as convenience stores, in Central Europe, Lewis added, "Across Central Europe there's an opportunity to do that; the other three markets are profitable and growing. Looking at convenience formats in all the Tesco countries is something we actively do."
Ireland Performance
Elsewhere, in Ireland, Tesco saw a decline in like-for-like performance over the four quarters of the year, with Q1 seeing a 3.0% increase, Q2 up 3.1%, Q3 down 0.2% and Q4 down 0.4%. Total like-for-like sales were up 1.3% for the year.
Commenting on the decline in like-for-like performance in the Irish market, Lewis said, "I'm very happy with the Irish performance. In Q3 we made a decision to stop accepting competitor coupons. There was a very high level of couponing in the Irish market, we stopped taking them.
"We definitely felt that in some of the headline numbers, but we felt that it was the right thing to do. In Q4, we started doing some targeted activation ourselves. But the big decision was not to take competitor coupons in Q3."
Overall, Tesco posted group sales of £56.9 billion (€66 billion) for the year, which was up 11.3% at constant rates.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
