Tesco looks for eastern Europe expansion

Tesco, the world’s number three retailer, yesterday detailed plans to double returns from its central and eastern European business by buying more goods regionally, opening a variety of stores and selling more services.

At its annual results in April, the supermarket group set a target to boost company-wide returns to 14.6 per cent by 2014/15 from 12.9 per cent in 2010-11.

As part of that, it aimed to double returns in central and eastern Europe, where it operates in the Czech Republic, Hungary, Poland, Slovakia and Turkey, to 10 per cent over the same timeframe.

Tesco, which trails France’s Carrefour and US industry leader Wal-Mart by annual revenues, said most of the improvement would come from growing sales.

That would be driven in part by a revamp of its hypermarkets, which includes adding over 5,500 new lines and upgrading fresh service counters.

Like-for-like sales at eight converted stores that have been open more than eight weeks are up over 20 per cent versus a group of unmodified stores, with increases in both transaction numbers and average spend.

The group said it also planned to rapidly expand its smaller format stores, launch an online grocery offering across the region and introduce a range of services, like telecoms, opticians, pharmacy and photo businesses, into larger stores.

In Poland, it will relaunch its financial services business this financial year, extending its range of loans, savings and insurance products.