Tesco has shut down a “bulk selling” operation in Thailand after concluding it could not make a profit. The decision to walk away from nearly 6 per cent of Asian revenue contributed to a 3 per cent decline in like-for-like sales at Tesco’s international business, taking the gloss off a sixth consecutive quarter of growth driven by price rises and volume growth in the UK.
Dave Lewis, chief executive, said the shuttered Thai unit served independent merchants rather than individual consumers, and sold “large volumes of mainly tobacco and alcohol”.
He added: “It’s not profitable and it adds complexity to the way we run the operation. We took a decision to exit that segment in order that we could focus on direct retail customers.”
The supermarket chain is trying to extend its lead in UK convenience retailing with the £3.7bn takeover of food wholesaler Booker Group, announced in January.
Booker serves independent merchants rather than retail consumers and derives 30 per cent of its revenue from bulk tobacco sales. The acquisition has drawn criticism from two large shareholders and prompted the chain’s senior non-executive director to quit in protest. Richard Cousins, who left after just two years on the board, complained that Tesco “need[s] to make the business simpler, not more complex”.
