Tesco planning Lotus expansion

Related tags Tesco

The global pretensions of British food retail market leader Tesco
were made quite clear last month when the company announced that it had raise more than £1.6 billion
through a share placement and cost savings which would be used to
fuel growth both at home and abroad.

The company has wasted little time in putting this cash pile to work, buying​ the Adminstore convenience store group in London last month for £53.7 million, and further acquisitions in the UK are expected soon, with the company making no secret of its intention to snap up Safeway stores put on the market by Morrisons as part of its takeover of that company.

But Tesco also has big plans outside the UK as well, with chief executive Sir Terry Leahy highlighting the company's performances in Hungary, Thailand and South Korea in particular as boasting some of the highest levels of return on capital invested in the retail sector.

It comes as no surprise, therefore, that Tesco is preparing to increase its stake in its Thai business to 100 per cent this year, buying out local partner the Charoen Pokphand Group. Tesco operates under the Tesco Lotus Supercentre banner in Thailand, running 55 stores there under a wide range of formats, including hypermarkets, supermarkets, convenience stores and discounters.

Tesco already holds more than 90 per cent of Tesco Lotus, and the CP group is expected to reduce its shareholding in the joint venture to less than 5 per cent this year, eventually offloading its entire stake to the British group.

Britain's number one retailer has declined to comment on the move, but Ek-Chai Distribution, a joint venture between CP and Tesco which runs the Tesco Lotus chain, told the local paper The Nation​ that CP wanted to focus entirely on supplying the chain rather than managing it, leaving that task to its erstwhile partner.

Tesco is also planning to expand the number of outlets it operates in Thailand, by far the most advanced of its Asian operations. The paper reports that a further five stores are planned for this year, taking the total to 60. The company is said to be growing at around 10 per cent a year, with turnover in 2003 reaching Bt60 billion.

Tesco also operates in Taiwan, Korea and Malaysia, and last year entered the Japanese c-store market through the acquisition of C Two-Network. The company is expected to invest MR140 million in expanding its Malaysian business this year, according to local press reports, including a new hypermarket in Penang and one other outlet, as part of a five year plan to open up to 10 hypermarkets nationwide.

The company is also expected to expand its business in eastern Europe this year, with all the markets where it operates (Hungary, Poland, Czech Republic, Slovakia) about to join the EU, and is also likely to expand its business in Turkey, a market it recently entered through the acquisition of Kipa in November.

Related topics Market trends

Related news

Show more

Follow us


View more