Leading UK retailer Tesco says it is committed to pursuing 'disciplined' international growth in light of falling annual group profits for the second year in a row.
Announcing Tesco’s preliminary 2013/14 results today (16 April), Tesco chief executive Philip Clarke said the group would reduce its new investment in Europe and focus on its high-returning markets in Asia, namely Korea, Malaysia and Thailand, as well as new ventures in China and India.
However, group capital expenditure (capex) in Asia would be limited to no more than £2.5bn per year for at least the next three financial years, Clarke said.
Commenting on Tesco’s international strategy, Clarke said: “Going forward, the majority of our capital expenditure on new stores will be on high-returning investments in Korea, Malaysia and Thailand. We plan to open 1.2m square feet in these markets in 2014/15, whilst continuing to grow our convenience and grocery home shopping operations.
'We have completed our exit from the US and established partnerships with CRE in China and Tata in India which provide continued access to two of the world’s most exciting markets, consistent with a sustainable level of future investment.”
Measures to curb international investment come as external pressures in Korea and Thailand led to Tesco Group trading profit falling by 5.6 per cent in Asia to £692m compared to the prior year.
Meanwhile, the eurozone crisis contributed to a £734m loss of value in Tesco’s European business in 2013/14.
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