Tesco has ended talks with potential partners over the future of its loss-making Kipa business in Turkey.
Tesco admitted it was in discussions “with various parties in respect of potential options” for its Turkish business in February following a report in the Financial Times that the retailer was looking to combine Kipa with the country’s biggest food retailer Migros.
Tesco confirmed this morning that talks with third parties over Kipa had ended, adding: “We are committed to driving value from all our businesses and, for Kipa, we believe that this is best achieved by accelerating our plans to focus the business on its heartlands, minimise capital spend and improve profitability.”
Tesco will now plough on with its previously stated plans to stem Kipa’s losses, which include selective store closures focussed in the east of the country.
An analyst note from Shore Capital Stockbrokers said: “We harbour a modicum of disappointment that Tesco has not been able to attract new local talent and capital into its Turkish business, which we felt may have been a more rapid and credible basis to improve the operating performance.”
Shore Capital restated its sell recommendation, adding: “The disappointment from Europe has been highly transparent for some time for shareholders. However, it is the UK where our worry lines are at their most furrowed.”
Tesco acquired Kipa in 2003 and has since expanded the chain to more than 190 stores in 20 Turkish cities.
Last month Tesco reported that group trading profit for its European division, including opperations in the Czech Republic, Hungary, Poland, Slovakia, Turkey and Ireland, was down 28% last year.
The group reported an overall drop in full-year group profit of 6% and a fall in UK like-for-like sales of 1.3%.
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