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Tesco 'set to wind up Home Plus'

Supermarket giant Tesco is understood to be close to winding up its stand-alone furnishing chain Home Plus as it regroups and focuses on its core grocery business.

The grocer, which has 2,700 stores in the UK, is keen to exit leases it holds on all 13 of its Home Plus stores following weak sales at the out-of-town warehouse-style outlets, The Times said.

Tesco and its property adviser Morgan Williams have been reviewing the Home Plus stores for six months, while two of the branches in Telford, in Shropshire and Staines, in Surrey, are already being formally marketed.

Tesco saw billions of pounds wiped from its shares earlier this month after the supermarket admitted that its £500m price cut campaign had failed to bring in enough customers.

There are Home Plus stores in Bracknell, Bristol, Chelmsford, Chester, Manchester, Edinburgh, Nottingham, Preston, Southampton, Staines, Telford and Bromborough on the Wirral.

Chief executive Philip Clarke has pledged to lead a change in the company’s expansion strategy, with less focus on massive out-of-town stores, and said it would move faster to restore the company’s sales growth at home.

Tesco first opened Home Plus stores at retail parks in 2005. They contain no food and sell only furniture and soft furnishings.

However, the report said Tesco faces difficulties as the leases on the Home Plus stores are for 15 or 20 years with unfavourable terms. If Tesco is unable to find new tenants, it is likely to leave the stores open.

Tesco reported a “disappointing” 2.3% decline in like-for-like sales excluding VAT and petrol in the six weeks to January 7, which came in below its own expectations.

Tesco pledged to invest “hundreds of millions” in improving the quality and range of its offering and further lowering prices.

Source : Irish Examiner

23 January 2012
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