Britain's biggest retailer Tesco announced on Wednesday that it is pulling out of Japan after eight years and putting its 129 small supermarkets on sale to focus on other operations in Asia. "Tesco has today announced its decision to sell its business in Japan," the group said in an official statement to the London Stock Exchange following a major review of its Asian activities.
The company, the world's third-biggest retailer by sales, added that the under-performing Japanese division was the smallest of Tesco's international businesses. "We have reviewed our portfolio in Asia and the performance of our business in Japan," Tesco chief executive Philip Clarke said in the statement.
"Having made considerable efforts in Japan, we have concluded that we cannot build a sufficiently scalable business." He added: "We have decided to sell our operations there and focus on our larger businesses in the region, in line with our priority of driving growth and improving returns."
However, the company added that more than half of the 129 small stores in the greater Tokyo area that operate under the Tsurakame, Tesco and Tesco Express names, actually make a profit. Clarke meanwhile rejected suggestions that the decision could mean that Tesco could dispose of its loss-making US business Fresh & Easy. In reaction to the news, Tesco's share price rallied 2.25 percent to 373 pence in late morning deals on London's FTSE 100 index of top companies, which was one percent higher at 5,321.80 points. Global retail giant Tesco employs 500,000 staff world-wide has more than 5,400 shops in 14 countries around the world. That includes over 1,400 branches in Asia, where it has stores in China, Japan, Korea, Malaysia and Thailand. Tesco had entered the Japanese market in 2003 with the purchase of the C2 Network, which ran stores under the Tsurakame brand.