Tesco has confirmed details of its planned withdrawal from the Japanese market, which was initially announced last year.

Through its formation of a joint venture with Japanese retailer AEON, the company will gradually hand over control of its Japanese operations. The deal allows Tesco to cap its exposure to Japan with the agreed investment of GBP40m (US$62.7m) to restructure operations.

While Tesco does not publish earnings details for individual countries, it is believed the unit is loss-making and analysts have estimated the group made a loss in the region of GBP11m in fiscal 2011.

The move is a reflection of the difficulties associated with retailing in Japan: the highly-competitive, well-developed retail landscape has been shaped by poor consumer sentiment and a bleak economic landscape for a number of years and retailers have seen sales stagnate as a consequence.

Click here for further comment from Tesco and the thoughts of Shore Capital analyst Clive Black on the move.