Tesco is mulling the sale of its non-core loss-making businesses. Among them are its Dobbies Garden Centres and its coffee shop chain Harris & Hoole. The move, under chief executive Dave Lewis, is expected to help the British supermarket chain reduce losses and focus on its core supermarket business.
About a fortnight ago, Lewis and his senior colleagues at Tesco decided on shutting its healthy living business, Nutricentre. Tesco also has mulled the sale of its restaurant chain, Giraffe.
Dobbies was acquired by Tesco in 2008, when Sir Terry Leahy served as its chief executive. Today, it has a chain of 35 garden centres across the country and many of them are attached to the company's supermarket. Dobbies's performance has been poor. After writing down the value of its real estate, it reported a £48m (€60m, $68.34m) loss in its 2014-15 financial year. Lewis is said to have appointed Greenhill, a boutique advisory firm, with regards to the sale of Dobbies.
Meanwhile, plans to sell Harris & Hoole follow Tesco taking full ownership of the chain under an existing agreement with its other shareholders. According to its website, the London-based company has about 40 operational coffee shops.
Tesco is also planning to close its bakery business, Euphorium. The non-core business sells products ranging from bread to sandwiches and cakes. Started in 1999, the bakery is present in five high street locations and across more than 60 concession stores, according to its website.
The revenue contribution of these non-core businesses to Tesco's overall numbers is significantly low. Hence it was unlikely that Lewis would announce any plans for them on 13 April when he is set to unveil the British retailer's full-year results, sources told SkyNews.
Many of the smaller businesses were acquired by Philip Clarke, the former chief executive of Tesco, who led the company prior to Lewis. The aim behind these deals was to help the supermarket chain diversify from its retail business and utilise excess space at some of its stores. However, Lewis who took over the lead role at Tesco post Clarke's sacking in 2014, wanted to sell all those businesses and brands of Tesco that were either reducing the company's profits or were pushing down its turnaround plan.
For instance, after Lewis took over, Tesco went on to sell its business in South Korea for £4bn. The company had also put Dunnhumby, its data analytics business, up for sale, but eventually called it off after failing to get attractive offers.