Tesco and BhS speed up foreign expansion
Wednesday 06 March 1996
Two of Britain's leading retailers have announced plans to accelerate their international expansion. Tesco is spending pounds 77m buying two supermarket groups in the Czech Republic and Slovakia. Meanwhile Storehouse has signed a franchise agreement with the Hong Kong giant Hutchison Whampoa to develop BhS in the Far East.
Tesco's deal strengthens its position in Central Europe. It already operates 45 stores under the Tesco name in Hungary. and last November bought a 76 per stake in Savia, which has 36 stores in Poland.
Tesco is buying the two companies from KMart and expects to complete the deal in April. The two companies control 13 stores with combined annual sales of pounds 140m last year, of which food accounts for a third.
Tesco said that the deals would enable it to grow both its food and non- food businesses in Central Europe; the economies of both the Czech Republic and Slovakia were forecast to grow by 4-5 per cent this year.
Storehouse has signed an agreement with Hutchison Whampoa's retailing division AS Watson, to open the first branches of BhS in the Far East. Initially it plans to open two branches in Honk Kong and Shanghai, with plans for others in China and Taiwan.
Storehouse's international operations are becoming a significant factor in the group's development and now accounts for 6 per cent of group sales.
BhS now has 50 franchised branches in 12 countries, mainly in the Middle East and Southern Europe, including Spain and Greece. Mothercare has 112 outlets in 21 countries. It has a strong presence in the Far East, particularly Japan, Singapore and Hong Kong.
In May BhS will open its first branch in Moscow and Mothercare will open its third. Mothercare also has openings planned for Manila, Brunei and the Lebanon.
Storehouse said it was working on other deals that would take the company into new markets but declined to be drawn on details. Chief executive Keith Edelman said: "We see the expansion of our international franchise network as a very important part of our strategic growth plans. By the end of next year our international business should be approaching 10 per cent of group turnover."
Last week Storehouse paid Boots pounds 62.5m for Childrens World, the out of town childrens stores which it plans to convert to the Mothercare format. The company says it plans to stick to two main divisions. Its smaller Blazer menswear format is seen as non-core but is making modest profits.
Storehouse shares jumped 9p to 329p. Tesco shares closed 2p higher at 280.5p.
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