Tesco has raised £300m from the sale and leaseback of four shopping malls in South Korea.
Tesco’s Homeplus subsidiary sold the stores to investment consortium IGIS Asset Management as part of the retailer’s stated aim to raise funds for the group through the sale of international property.
Tesco has 450 stores in Asia and South Korea is its biggest market outside the UK.
Tesco has had its profits forecast in South Korea cut after changes to legislation meant that large stores are not able to open two Sundays a month. Sundays are retailers’ busiest days in South Korea.
Shore Capital analyst Clive Black said: “The proceeds from the disposal are expected to assist the development of the Korean business from both financing and investment perspectives. As per the statement, we would expect further such activities to feature on an ongoing basis across Tesco’s core international markets.
“With store closures now required on two Sundays each month, the key shopping day in the country, plus restrictions on 24-hour opening, business at the large stores of Homeplus and the other major players such as E-Mart and Lotte is negatively impacted. Added to this regulatory burden is a weak and highly leveraged consumer economy.
Black added: “Shore Capital expects Tesco to report a material downturn in like-for-like sales and trading profit momentum from Homeplus.”