Why Tesco is Walking Away from Central Europe and What Retail Leaders Must Learn

2.5%. That was Tesco’s profit margin in Central Europe, while the UK made 4.7%. Yet, their regional business actually grew by 8.1%.

So why is Tesco working with bankers to sell 561 stores in Czechia, Slovakia, and Hungary?

Because Hungary’s government made profit illegal. In 2025, they capped markups on basic foods at 10%. But retailers need a 30% gross margin just to cover logistics and wages. Consumers think they win, but workers and local producers lose their livelihoods.

My professional opinion? Walk away. Growth means nothing if you lose money on every loaf.

But why drag Czech and Slovak stores into this exit? Simple: their operations are fully integrated. Tesco ran them as one machine with shared logistics and buying. Cutting Hungary leaves a massive overhead built for three nations to be paid by just two. Slovakia is already tough, requiring a £75M write-down. Since nobody wants Hungary alone, Tesco has to package all three to get a clean exit.

Others are reacting too:
SPAR moved its properties to a Swiss foundation to stop expropriation.

Auchan exited fully, selling to local group Indotek.

My conclusion for FMCG and retail leaders: First, margin is reality. Never stay where the state controls prices. Second, regional integration is a risk. One bad country can drag down the good ones.

What do you think?

Tesco chose a clean break, but its rivals are executing entirely different survival blueprints.
While SPAR is fighting in EU courts and routing its real estate through a Swiss foundation to prevent state takeover, Auchan just quietly completed a 100% exit to a local group via a strict franchise loop.
I have put together a forensic breakdown comparing these three crisis-management strategies, along with the full country-by-country revenue and store metrics for the region.

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