Embattled UK retail giant Tesco will reveal the first steps in a turnaround plan on Thursday, UK time, which may include word on the future of its Asian operations.
Embroiled in a fraud investigation over fabricating trading information, which has seen three executives suspended, and on the losing side of a bitter market share war with discounters Aldi and Lidl in its home market, the retailer’s share price has halved in the last six months and its credit rating is now one step above junk rating.
There has been extensive speculation the company may move to sell off its Asian operations, particularly its Tesco Lotus business in Thailand, which could fetch as much as £5 billion which would make a considerable dent in its debt level.
As InsideRetail.Asia reported in November, Thailand’s second richest man has reportedly been in ‘informal talks’ over a bid to buy back the business.
Dhanin Chearavanont, the billionaire owner of the Charoen Pokphand Group (CP) was Tesco’s original joint venture partner in the nation, but sold his stake during the Asian financial crisis. Neither party has since denied the reports, with a banking source confirming discussions had been held.
On Thursday, Tesco’s new CEO Dave Lewis is expected to announce the first cost cuts and asset sales, with the likelihood of significant redundancies amongst the 4000-strong head office team and a rationalisation of 32 regional offices across the UK. He will also deliver a quarterly trading update, with the news expected of some improvement in sales since the first half of the year, when same store sales fell 4.6 per cent.
He is not expected to deliver a three year strategic plan at this point, or any finite long term goals, the current focus being on stemming the fall in sales and market share and boosting the balance sheet through debt reduction.
Besides the Thai business, Tesco has a successful operation in South Korea valued at £4 billion, and it may spin off all or part of its UK banking operations.
Source insideretail.asia