British supermarket chain Tesco is considering the sale of its Central European operations, including its businesses in Slovakia, the Czech Republic, and Hungary, according to The Financial Times, citing sources familiar with the matter. The newspaper reports that the company has already begun consulting investment bankers about a potential deal. Tesco declined to comment, saying it does not respond to market rumors or speculation.
If completed, the transaction would be one of the largest retail deals in Central Europe in recent years.
Why Tesco May Leave the Region
The main reason behind the potential sale is the relatively small role that Central Europe plays within Tesco Group’s overall business.
In the last financial year, Tesco reported total revenue of approximately £66.6 billion. More than £53 billion came from the UK and Ireland, while its wholesale subsidiary Booker generated around £9 billion. Slovakia, the Czech Republic, and Hungary together contributed just £4.45 billion, or about 6% of the group’s total revenue.
The region’s contribution to profits is even smaller. Of Tesco’s £3.15 billion in operating profit, only £115 million came from its Central European operations—around 3.6% of the total.
The region is also the least profitable part of Tesco’s business. Its operating margin in Central Europe stands at about 2.5%, compared with nearly double that level in the UK and Ireland.
Tesco Has Lost Market Share in Slovakia
Although Tesco remains one of Slovakia’s largest foreign retailers, operating around 185 stores, its position in the market has gradually weakened.
The company was Slovakia’s largest grocery retailer by sales in 2020, but it has since been overtaken by Lidl, Kaufland, and Coop Jednota.
Revenue at Tesco Slovakia has continued to grow gradually, largely thanks to the opening of new stores. However, profitability has declined significantly. In 2024, the company’s net profit fell by about 70%, to €25.5 million.
Central Europe No Longer a Strategic Priority
During recent meetings with investors, Tesco’s management has made little mention of its Central European business. Instead, the company has focused almost entirely on the UK market, which remains its primary source of revenue and the main testing ground for new technologies and services.
Chief Executive Ken Murphy has previously said that Central European markets face challenging economic and geopolitical conditions, rising operating costs—particularly labor expenses—and weaker consumer demand.
According to the company, most new products and services are introduced in the UK first before being rolled out to other markets if appropriate.
A potential exit from Slovakia would not be the retailer’s first withdrawal from overseas markets. In recent years, Tesco has steadily reduced its international footprint to focus on its core UK business. In 2020, it sold its Polish operations to Denmark’s Salling Group. Earlier, the company exited Thailand and Malaysia, selling those businesses for more than $10 billion. Tesco has also withdrawn from the United States, China, and South Korea.
Analysts say a sale of its businesses in Slovakia, the Czech Republic, and Hungary would be a continuation of this strategy, allowing Tesco to concentrate investment on its highly profitable UK market, where it holds around 28.5% of the grocery retail sector and competes with Sainsbury’s, Asda, Morrisons, Aldi, and Lidl.
