London -- Grocery giant Tesco PLC said Wednesday it is pulling out of Japan, which means shuttering 129 small, leasehold-owned stores in the Greater Tokyo area, which employ 4,000 people. The country is the smallest of Tesco’s international retail businesses, and the weakest for sales growth in the 2010-2011 fiscal year.
“Having made considerable efforts in Japan, we have concluded that we cannot build a sufficiently scalable business,” said Philip Clarke, CEO.
Tesco entered Japan with the purchase of 78 stores from retailer C Two-Network in 2003. It acquired another 27 stores from retail chain Fre'c in 2004, before expanding the business with its own stores. Tesco has since invested around $163 million in Japan, where it operates small-format stores, supermarkets and convenience stores under the Tsurakame, Tesco and Tesco Express banners.
A formal sale process is slated to occur over the coming months.