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February 13, 2006

CZECH REPUBLIC: Tesco continues eastward expansion

The Czech division of Tesco, the UK’s largest retailer, has purchased 27 stores in the Czech Republic from Germany's Edeka Zentrale AG, Tesco spokesperson Greg Sage told just-food this morning (13 February).

The Czech division of Tesco, the UK’s largest retailer, has purchased 27 stores in the Czech Republic from Germany’s Edeka Zentrale AG, Tesco spokesperson Greg Sage told just-food this morning (13 February). The financial details have not been disclosed.

All of the 27 stores are located in the northwest of the Czech Republic, along the German boarder.

The purchase, which requires the approval of Czech antimonopoly authorities, would cement Tesco’s position as the fourth-largest supermarket chain in the local market. In 2005, Tesco recorded sales of CZK22 billion (US$925 million) in the Czech Republic. In Slovakia, Tesco is already the market leader.

Following on from an agreement between Tesco and French chain Carrefour that would give Tesco 11 Carrefour stores located in the country in exchange for Tesco’s interests in Taiwan, the deal represents the continuation of the supermarket’s eastward expansion.

“Tesco moved into Hungry in 1994 and we’ve been expanding in central Europe since then,” Sage said.

Previously, Tesco has primarily focused on opening large stores and hypermarkets in major Czech and Slovak cities. Last year, the company began to test the waters by opening smaller stores in towns with populations of less than 20,000. This recent acquisition would fit well with this model for expansion.

“It’s a small acquisition, with store sizes of approximately 500 square metres,” Sage explained. “Tesco takes a multi-format strategy. We’ve had Express in a number of countries for some years now and have been considering ways to bring Tesco to areas that wouldn’t support a hypermarket.”

The announcement comes just days after Tesco announced its intention to move in on the US market.

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