Tesco: Exploring sale of European operations; EPS neutral, positive for strategy

Research evidence excerpt

Tesco: Exploring sale of European operations; EPS neutral, positive for strategy

C A Z E N O V E Europe Equity Research

09 July 2026

Tesco Overweight

TSCO.L, TSCO LN

Exploring sale of European operations; EPS neutral, Price (08 Jul 26):472p

positive for strategy Price Target (Feb-28):500p

European Food Retail

Borja Olcese AC

Our take: Per our analysis, the speculated exploration of strategic options for (34-91) 516-1511

Tesco’s Central European business is a potentially value-accretive step - subject to borja.olcese@jpmorgan.com

the price tag and subsequent cash inflow. While execution, buyer appetite and J.P. Morgan Securities plc

regulatory considerations remain key uncertainties, we believe a transaction could Palak Garg

further sharpen management’s focus on the core UK and Ireland business, (91-22) 6157-5102

subsequently providing additional capacity for shareholder returns or palak.x2.garg@jpmorgan.com

J.P. Morgan India Private Limited

reinvestment (or even both in a bull case scenario). Based on our sensitivity

analysis within, the deal would be relatively EPS neutral, yet clearly a positive for Specialist Sales contact details:

strategic direction. Olivia Petronilho - Specialist Sales -

European Consumer

What do we know? The FT article speculating this sale (link) is not very specific (44-20) 3493-3709

on details. We regard Tesco CE as a legacy asset, structurally challenged (mature olivia.b.petronilho@jpmorgan.com

markets and formats). One caveat in exploring the sale could be the lack of strategic

interest leading to relatively low bidding tension. What are CE financials?

Central Europe generated c£4.5bn in revenues (c6-7% of group), and £115mn in

operating profit (c3.5% of group) in FY26. The total number of stores are 184 in