Tesco to scale back presence in Hungary
TESCO said yesterday it is to shut 13 stores in Hungary “to secure the profitability” of its local business as the beleaguered retailer continues on its cost-cutting drive.
The supermarket giant has over 200 stores in Hungary, where it has operated since 1995 and has grown to be its third-largest employer serving 3m customers.
But it is now closing some of its stores after being hit by a major increase in costs caused by a raft of punishing taxes and regulatory changes on foreign-owned chains.
These include a drastic rise in the so-called supervision fee of foreign retailers and a new law forcing retailers to close if they report losses for two years.
Hungary’s parliament also approved a bill last month to introduce the “sabbath law” forcing big supermarkets to close on a Sunday.
A spokesperson said: “We remain committed to our business in Hungary and to our customers. Our first priority is to work with our colleagues in the affected stores and to do everything we can to find them alternative roles in Tesco.” The 13 stores closures will affect 500 employees.
Tesco chief Dave Lewis revealed a broad sweep of changes last week after a devastating year marked by profit warnings, high-profile departures and a plummeting share price.
In the UK, Tesco is to close 43 unprofitable stores and cut capital expenditure by £1bn as part of its turnaround plan.