Tesco reveals more store cuts

14-Jan-2015 - Last updated on 14-Jan-2015 at 18:15 GMT

Tesco is keeping the vast majority of its UK stores open

Tesco aims to axe 13 stores in Hungary and rumours suggest more will follow internationally, according to Shore Capital director and head of research Clive Black.

The news follows Tesco’s announcement last week that it would get rid of 43 stores in the UK as part of cost-cutting measures to improve performance.

“Since then it has emerged that store closures will not just be confined to the UK with 13 small outlets set to shut in Hungary and now, according to Reuters, a couple of outlets in the Czech Republic including a hypermarket to the north of Prague,” said Black.

A Tesco spokesman confirmed the closures to FoodManufacture.co.uk, but stressed one of the outlets affected in the Czech Republic had been flagged up before Christmas and involved no job losses.

‘Difficult decision’

In a statement, the retailer said: “To secure the long-term future and profitability of our Hungarian business for our customers and colleagues, we have taken the difficult decision to close 13 stores.

“We remain committed to our business in Hungary and to our customers. We are proud of our ongoing contribution to the Hungarian economy and look forward to continuing to serve our three million customers through our existing stores.

“Our first priority is to work with our colleagues in the affected stores and to do everything we can to find them alternative roles in Tesco.”

Commenting on the decision to shut another Czech Republic outlet, he added: “Closing the store was a difficult decision, which we have taken for business reasons. Colleagues were the first ones to be informed together with the trade unions.

“Where possible we will offer alternative roles to colleagues in our other stores in Decin, Litvinov or Most. Any colleagues leaving Tesco will be paid full redundancy in line with Czech legislation and will also receive a pay reward.”

Threats of strikes

Reuters reports suggested the closures in the Czech Republic had provoked threats of strikes, which would hamper business in the region if they were to go ahead, Black added.

He raised questions about the viability of Tesco’s plans to develop in Asia and its continued presence in Turkey, given its radical turnaround strategy, and the latest developments.

He said the UK’s top supermarket chain had not clearly defined its international strategy yet, but he expected to hear more about it in the group’s preliminary results in April.

Trevor Masters has recently been appointed as ceo of Tesco’s operations in Europe and Asia.