UK-based retail giant Tesco announced earlier in the week it had experienced its first drop in profits since 1994, down 11.6 per cent for the six months to 25 August on the same period last year.
One of the key drivers of that result has been the change in trading conditions in South Korea, Tesco’s biggest market in Asia.
New regulations restricting opening hours for big retailers in Korea are expected to shave off £100m (US$161m) from Tesco’s full year profits in the market, according to the retailer’s own predictions, or £70m according to financial analyst Nomura Group.
The regulations are designed to protect Korea’s traditional retailers, and mandate that large retailers must close for two Sundays a month, and opening hours for the rest of the week are restricted to 8am to midnight. Sunday is the largest trading day in the country, reported the BBC.
The new rules have been in and out of Korea’s administrative courts all year, but the country’s government seems set on restricting the expansion of large chains to preserve the independent retail sector.
Tesco has expanded to 458 stores in South Korea under its Homeplus banner since entering the market in 1999.
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