Almost a year after announcing it aimed to exit the country, British retail giant Tesco has unveiled a plan to hand over its troubled Japanese operations to local retailer Aeon.
Tesco announced on Monday it would exit Japan with a two stage plan, beginning with the sale of a 50 per cent share in its operations in the market to Aeon for a token ¥1 (US$0.01).
Once in a joint venture with Aeon, Tesco plans to reinvest £40m (US$62.7m) into its 117 stores to convert them to Aeon livery and preserve the chain’s workforce of nearly 1,000 staff, reported The Guardian.
Tesco said the move means it will have “no further financial exposure to the Japanese business or its operations”, which has been losing around £30m (US$47m) a year, according to industry analysts.
Aeon is expected to buy the remaining 50 per cent share in Tesco Japan in the northern autumn.
“We are very pleased to announce this deal with Aeon and are confident this will deliver the best outcome for our staff and for our shareholders,” said Tesco chief executive Philip Clarke.
Tesco declared its intention to exit Japan in August last year to focus on its more successful operations in the region. As with a number of other international retailers, Tesco has had significant difficulty carving out a space in the depressed and extremely competitive Japanese retail market, and currently only holds a share of around 0.1 per cent.
“Having made considerable effort in Japan, we have concluded that we cannot build a sufficiently scalable business,” Clarke stated last year.
Tesco entered Japan in 2003 with the purchase of Tokyo convenience store chain C Two-Network, which it followed up with the acquisition of bankrupt convenience store chain Fre’c.
