Tesco is to sell its business in Japan as it said it could not build a “sufficiently scalable” operation.

Chief executive Philip Clarke said: “We have reviewed our portfolio in Asia and the performance of our business in Japan.  Having made considerable efforts in Japan, we have concluded that we cannot build a sufficiently scalable business. 

“We have decided to sell our operations there and focus on our larger businesses in the region, in line with our priority of driving growth and improving returns. I want to thank our colleagues in Japan for their continued dedication to the business.”

Clarke said it has “good stores in good locations” across Greater Tokyo, and will undertake a formal sale process over the next few months. The business will continue to trade as usual in the meantime.

Tesco has struggled to build a profitable business in Japan. In its first quarter, like-for-like sales were down 6.4%.

Tesco has 129 stores in Greater Tokyo. The grocer said over half the stores are profitable.