Britain's Tesco considers Asia exit

[lopburi3]

2 minutes ago, Marpa47 said:

A big box chain in USA uses the tactic of moving stuff around.  This way more items are purchased as one wanders around looking for what was originally on your shopping list.  It’s a tactic that works apparently. 
 

Actually that is used here also - bread/eggs/milk (daily use items) and such at far corners of stores making you travel and be subject to the sale price/hunger offerings.  But Carrefour seemed to defy any such logic - totally unrelated items next to each other everywhere.

[Yadon Toploy]

4 hours ago, MaxLee said:

Well moving their investments somewhere else,.... which International company is next?

An astute and correct observation, missed by most on here.

 

A risk-based approach.

[korkenzieher]

Well, FWIW, I've recently gone back to Tesco after persistent price gouging at markets in the area (Hua Hin). TOPS is good, but not big enough and a touch pricey; fresh food at Gourmet (BluPort) is ridiculously over priced - though other products seem OK; Villa Market has completely lost the plot; and I think BigC is the worst store I have seen this side of the Iron Curtain. Tesco is about half of my shop and almost all my fresh produce, currently. Meat comes from Moo Wanna and general groceries from BluPort. Tea is airlifted in in m y luggage; Wine is - erm - locally produced...????

 

WRT England, my local Tesco in the north east last time I went, looked like it had been down-shifted to 'working class warzone' status - it is in the affluent rural part of Yorkshire. Simple things - 12 miles from Leyburnj and no Wensleydale cheese - but as much f*cking halloumi as I want and so on. The town just isn't ABC / millennial / snowflake - so guess what - most of the populus has traipsed off to Lidl and Heron. Can't say I blame them.

 

It seems to me that at the corporate level, Tesco has the same problem Marks & Spencer did - they are re-trenching to the core - and badly run - business, by selling profitable overseas business and simultaneously giving the impression that over expansion was the original problem. It isn't. Pulling money to the UK won't change a business model that has been outflanked, not least by the need to obey the financial regulators when Aldi and Lidl don't have to demonstrate the same fiduciary responsibility. In plain language - Tesco (and Sainsbury's) need to produce a dividend etc. which means that the privately held German volume shifters can always undercut them. It isn't a level playing field.

[Bangkok Barry]

39 minutes ago, Marpa47 said:

A big box chain in USA uses the tactic of moving stuff around.  This way more items are purchased as one wanders around looking for what was originally on your shopping list.  It’s a tactic that works apparently. 
 

 

Normal in the UK, but less so in Thailand in my experience.

[chilly07]

I use Tops for convenience and quality. Tesco and BigC car parks are always packed but strangely Tesco store is packed with long queues whereas BigC is strangely empty so I assume it is the supplementary traders and foodhall that attract Thai's to BigC. Before I used Tops I used Carrefour and am sorry they have gone. 7/11 seem to have outdone Family Mart and Tesco Express unfortunately!

[StayinThailand2much]

6 hours ago, unamazedloso said:

????i see a "tesko" in thailands future..

I hope, the stores will be taken over by 'Big C', which, IMHO, is way ahead in regards to both, product range, and customer service.

[SOTIRIOS]

....first Carrefour....

 

...my local Tesco express.....

...changed air conditioning units 4 times in the past 3 years....

 

...nationally....

...changed their water bottle labels 3x in the same period....

 

..perverse abuse....

 

...tried writing them a letter a few times....

...fell on deaf ears...

 

...as is the case so many times with foreign entities...

....they will provide a great deal for the 'natives' waiting in the aisles...

 

 

 

 

 

[StayinThailand2much]

6 hours ago, scubascuba3 said:

Tesco just isn't as popular in Thailand, the small stores are a 3rd or 4th choice for me. The big stores aren't busy (compared to Big C Extra) and the prices aren't attractive enough to make the effort and go there

I quite liked Tesco's when I lived in the UK, years ago, even though I liked Sainsbury's better. But there is nothing that reminds me of "Tesco's, UK" in the Tesco-Lotus stores. All just some "Lotus"... ????

[Airbagwill]

If Tesco pull out, where will I get my green potatoes?

[ParkerN]

7 hours ago, sammieuk1 said:

A re-brand to same same tat in order its become a shop that bears no resemblance to the Tesco name????  

Indeed it has not; not that the Tesco name is great to start with. Anyone who's had any dealings with Tesco Lotus must observe that evan the European Management has adopted the Thai approach of "I'm a pooyay, I don't talk to of have any other kind of contact with serfdom I've got a few hundred brain-dead teenagers to do that".

[KhunFred]

Looks like an opening for USA's Wal-Mart. I would be surprised if Wal-Mart qualifies, because the Walton

family greed is even worse than the Thai government. Many countries won't allow Wal-Mart in because of

their predatory business practices.

[Fex Bluse]

6 hours ago, Katipo said:

Actually, Tesco in Thailand is one of their most profitable markets, and has been for quite some time. It's the problems back home due to declining profits and mismanagement that are the reason behind the potential sale. I should add that the idea for this sale has been around for over 5 years. The fact is seems to be being so widely talked about at this time, suggests that a potential buyer/exit strategy is in the pipeline. Perhaps we'll see a Chinese supermarket chain with aisles full of Chinese products very soon.

Chinese products filled supermarket highly unlikely, but thanks for the petrifingly scary thought! 

 

Exporting Chinese products to Thailand, undercutting the Thai agribusiness would make little sense for Thailand economically. Also, with a new food scandal almost every week in China, Thais would not likely overcome the stigma. 

 

I suspect the potential buyer is a Japanese chain looking to expand. If that happens, it will be fantastic as the Japanese seem to be the only people able to make many Thais do good work.

 

Outside of CP, no Thai retailer would be able to manage. We see what happened to Dean and Deluca - with the Thai company ruuining it and filing for bankruptcy. 

 

Let us pray it's not a Thai company. 

 

[justin case]

it is so profitable, that they want to get rid off

 

that is bullcrap propaganda to find a buying that want to pay and believe there will be profits...

 

aka GREED

[ParkerN]

25 minutes ago, justin case said:

it is so profitable, that they want to get rid off

 

that is bullcrap propaganda to find a buying that want to pay and believe there will be profits...

 

aka GREED

Agree. If Tesco (UK) own a controlling interest in Tesco Lotus, then why would they want to sell it if it is earning well? Given the history of Tesco (UK) over the past few years, I would conclude that the current boss is not stupid, and would not try to sell Tesco Lotus unless there is a compelling reason to get out of Thailand and/or a compelling profit motive.

[snoop1130]

Tesco shares jump on possible sale of Asian business

By James Davey

 

FILE PHOTO: A company logo is pictured outside a Tesco supermarket in Altrincham northern England, April 16, 2016. REUTERS/Phil Noble/

 

LONDON (Reuters) - Shares in Tesco (TSCO.L) jumped nearly 6% at one point on Monday after Britain’s biggest retailer said it was considering a sale of its remaining Asian businesses, in Thailand and Malaysia, which analysts valued at up to $9 billion.

 

Tesco said on Sunday that it had begun a review of its Asian operations following “inbound interest” in the businesses that generate about 8% of the supermarket retailer’s total annual revenue and 10% of its profit.

 

Tesco said the review was at an early stage and gave no details of the approaches received.

 

Its share price was up 11.7 pence, or 5%, at 243.9 pence at 0915 GMT, after rising as much as 5.6% in early trade.

 

Analysts at Bernstein valued the Asian business at 6.5 billion pounds to 7.2 billion pounds.

 

Tesco trades from 1,967 stores in Thailand and 74 in Malaysia. In the six months to Aug. 24 the businesses together generated sales of 2.56 billion pounds, up 1% at constant exchange rates from a year earlier, and operating profit of 171 million pounds, up 42.3%.

 

Bernstein analyst Bruno Monteyne said Tesco’s Thai operation was a “high quality business”, with 50% of its earnings coming from a mall-rental business and 50% from a food retail market that is much less competitive than the UK. He said the Thai business still had material organic growth opportunities.

 

At a capital markets day in June, Tesco said it was well placed to grow in Asia, particularly in Thailand, where it saw an opportunity for 750 new convenience stores over the “medium term”.

 

Monteyne noted that Tesco’s main Thai competitor BigC was sold to Thai conglomerate Thai Charoen Corp in 2016 for $3.4 billion or 16 times enterprise value/earnings before interest, tax, depreciation and amortisation (EBITDA), while Tesco itself trades at 6.8 times EV/EBITDA.

 

“That leaves the Thai business hugely undervalued as part of the group. That in itself provides ample justification to consider a disposal, especially if there is unsolicited interest,” he said.

 

Celebrating its 100th anniversary, Tesco is five years into a UK-focused recovery plan launched by Chief Executive Dave Lewis after an accounting scandal capped a dramatic downturn in trading. In October Lewis declared Tesco’s turnaround complete and said he would step down next summer.

 

He will be succeeded by Ken Murphy, a former executive at healthcare group Walgreens Boots Alliance (WBA.O), at a date yet to be confirmed.

 

In 2015 Tesco sold its South Korean arm to a group led by private equity firm MBK Partners for $6.1 billion. A year later it sold its Kipa business in Turkey to Migros, the country’s largest supermarket chain.

 

Under its previous management Tesco made costly exits from Japan, the United States and China, starting a retreat from its once lofty global ambitions.

 

If Tesco does quit Thailand and Malaysia, it will inevitably raise questions over the future of its remaining overseas operations - its loss-making central European division, consisting of stores in Czech Republic, Hungary, Poland and Slovakia.

 

-- © Copyright Reuters 2019-12-09

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[Airbagwill]

3 hours ago, justin case said:

it is so profitable, that they want to get rid off

 

that is bullcrap propaganda to find a buying that want to pay and believe there will be profits...

 

aka GREED

you obviously don't buy and sell very much.

[toofarnorth]

12 hours ago, Youlike said:

Ask me what i think of the Tesco songs being played in their big shops....

Right now there is a fat bloke in red apparel sitting outside Lotus up here and inside , once more same same every year .................,Dingen ben , dingen ben , dingle all the way '

[saengd]

"Its lucrative Korean operations are long gone, sold for more than £4bn as part of Dave Lewis’s attempts to repair the balance sheet when he was parachuted in five years ago. But its Lotus chain in Thailand has been such a roaring success that Tesco recently laid out plans for another 750 stores in the country, its first major overseas expansion since 2014’s financial meltdown. So an unsolicited approach for the business, along with its much smaller Malaysian arm, presents “Drastic Dave” with something of a predicament. Tesco’s shares jumped 5pc after confirming interest from an unnamed party but a deal is far from certain.

 

Tesco is growing faster in Thailand than anywhere else. It is the most profitable part of a shrunken empire with margins of about 6pc, compared with less than 3pc in the UK and Ireland".

 

 

https://www.telegraph.co.uk/business/2019/12/09/tesco-must-think-hard-selling-southeast-asian-golden-goose/

 

[mickey rat]

If true, CP Chicken will be more than interested in adding it to their collection. 

[newatthis]

18 hours ago, StayinThailand2much said:

I hope, the stores will be taken over by 'Big C', which, IMHO, is way ahead in regards to both, product range, and customer service.

Not locally. Homepro draws me to Big C otherwise it's not worth the trouble. Insufficient fresh food / vegetables, old looking meat and bad service leaves it streets behind Tesco/Lotus here.

[Classic Ray]

Would love to see a disrupter like Aldi or Lidl, perhaps partnered with a Japanese or  Chinese chain, enter the Thai market and break the existing stranglehold. High quality products at low prices, introduce Thais to more Western food, have the limited quantity special offers on electrical products, tools etc, would be great!

[heybuz]

1 hour ago, Classic Ray said:

Would love to see a disrupter like Aldi or Lidl, perhaps partnered with a Japanese or  Chinese chain, enter the Thai market and break the existing stranglehold. High quality products at low prices, introduce Thais to more Western food, have the limited quantity special offers on electrical products, tools etc, would be great!

Aldi are family owned there not that silly to give away any portion to someone else

[MarcelV]

Here in the deep southern province of Narathiwat I'd love to have a Tesco or Big C as there are none anywhere close.

And I'm pretty sure I wouldn't be the only patron there.

[SunsetT]

2 hours ago, Classic Ray said:

Would love to see a disrupter like Aldi or Lidl, perhaps partnered with a Japanese or  Chinese chain, enter the Thai market and break the existing stranglehold. High quality products at low prices, introduce Thais to more Western food, have the limited quantity special offers on electrical products, tools etc, would be great!

And stop putting salad cream on pizza....555!

[heybuz]

22 hours ago, korkenzieher said:

Well, FWIW, I've recently gone back to Tesco after persistent price gouging at markets in the area (Hua Hin). TOPS is good, but not big enough and a touch pricey; fresh food at Gourmet (BluPort) is ridiculously over priced - though other products seem OK; Villa Market has completely lost the plot; and I think BigC is the worst store I have seen this side of the Iron Curtain. Tesco is about half of my shop and almost all my fresh produce, currently. Meat comes from Moo Wanna and general groceries from BluPort. Tea is airlifted in in m y luggage; Wine is - erm - locally produced...????

 

WRT England, my local Tesco in the north east last time I went, looked like it had been down-shifted to 'working class warzone' status - it is in the affluent rural part of Yorkshire. Simple things - 12 miles from Leyburnj and no Wensleydale cheese - but as much f*cking halloumi as I want and so on. The town just isn't ABC / millennial / snowflake - so guess what - most of the populus has traipsed off to Lidl and Heron. Can't say I blame them.

 

It seems to me that at the corporate level, Tesco has the same problem Marks & Spencer did - they are re-trenching to the core - and badly run - business, by selling profitable overseas business and simultaneously giving the impression that over expansion was the original problem. It isn't. Pulling money to the UK won't change a business model that has been outflanked, not least by the need to obey the financial regulators when Aldi and Lidl don't have to demonstrate the same fiduciary responsibility. In plain language - Tesco (and Sainsbury's) need to produce a dividend etc. which means that the privately held German volume shifters can always undercut them. It isn't a level playing field.

Aldi don't know about lidl has no share holders and aren't answerable to anyone.

[StayinThailand2much]

On 12/9/2019 at 11:44 AM, DrTuner said:

Lotus is the low end supermarket. Thais flock there every payday. Must be quite profitable. Only thing I buy from there are some wines, when they happen to have some odd batch and casino brand imports. In other words, the legacy goods that somehow got transferred from Carrefour. Should Thais buy it and stop the imports, no reason to go anymore.

 

EDIT: Or am I confusing with BigC .. not sure. I rarely use either these days. Makro FTW.

Casino brand products can be found at Big C. That Carrefour left was a real loss for shoppers. Still finding Casino products at

some Big C outlets is great. I only frequent Tesco-Lotus if I want to buy cheap stuff like beer, juice, milk, or bread. Sadly, Villa, Tops, and Foodland have in recent years switched to cheap products, aiming for the more numerous local customers. 

[StayinThailand2much]

5 hours ago, Classic Ray said:

Would love to see a disrupter like Aldi or Lidl, perhaps partnered with a Japanese or  Chinese chain, enter the Thai market and break the existing stranglehold. High quality products at low prices, introduce Thais to more Western food, have the limited quantity special offers on electrical products, tools etc, would be great!

Already happened. (Or not.) - SPAR is a big discounter in Europe. First time I saw them here in Bangkok, I entered, hoping for "European" or imported goods, perhaps even some quality bread, but only saw the usual product range of a 7-Eleven. Well, I hardly ever eat instant noodles, don't use much cooking oil, and you can only eat so many hot dogs... Haven't been there since.

[StayinThailand2much]

6 hours ago, newatthis said:

Not locally. Homepro draws me to Big C otherwise it's not worth the trouble. Insufficient fresh food / vegetables, old looking meat and bad service leaves it streets behind Tesco/Lotus here.

Granted, quality of products and service varies from outlet to outlet. While I find the service at Tops quite consistent, same cannot be said of either, Tesco-Lotus or Big C.

[StayinThailand2much]

19 hours ago, snoop1130 said:

Monteyne noted that Tesco’s main Thai competitor BigC was sold to Thai conglomerate Thai Charoen Corp in 2016 for $3.4 billion or 16 times enterprise value/earnings before interest, tax, depreciation and amortisation (EBITDA), while Tesco itself trades at 6.8 times EV/EBITDA

They'd be damn lucky, if someone gave them 10 times EBITDA.

[DrTuner]

2 hours ago, StayinThailand2much said:

They'd be damn lucky, if someone gave them 10 times EBITDA.

The purchase would be instantly followed up by jacking up prices thanks to the monopoly. Loads of baht to be made off the backs of the peasants. Let 'em eat cake.