Tesco to Spend $750m on Turkish Expansion - Emerging Real Estate

Tesco to Spend $750m on Turkish Expansion

4/14/2008

Britain’s biggest retailer yesterday said it wanted to significantly increase its number of hypermarkets in Turkey and to break into Istanbul. It now has 46 stores in clusters around cities such as Izmir, where property is cheaper. The business, which trades as Kipa, generated £500 million of revenue in 2007.
A spokesman said: “Turkey is a fast-growing and exciting market and we are delighted with how the business is performing. Entering Istanbul — the biggest city in the country — will bring Kipa quality and value to many more Turkish customers.”

Tesco runs stores in 13 countries outside the UK, including Poland, Korea and China and recently opened a chain of Fresh & Easy convenience stores in the United States. It is also eyeing Russia and India.

Sir Terry Leahy, Tesco’s chief executive, told The Times two months ago that overseas operations would account for half its revenue within the next five to ten years. It currently accounts for just over a quarter. He said: “We are on the threshold of becoming one of the few successful international retailers.”

Andrew Higginson, the finance director, attacked analysts last week for a “Little Englander” attitude when they questioned Tesco’s weak UK sales growth over Christmas. He felt they were ignoring strong growth overseas.

Under the plans announced yesterday Tesco will spend about $150 million a year between now and 2013. Much of the money will build more hypermarkets. Tesco runs 12 in the country alongside convenience stores and smaller supermarkets. The first store in Istanbul is expected to be unveiled in May.

Tesco’s move coincides with the first round of bidding for Migros, the Turkish supermarket chain. Germany’s Metro, Carrefour of France and IKEA have all stepped up their expansion efforts in the country.

From The Times

Steve Hawkes