After record losses Tesco’s Chief Executive Philip Clarke has announced that the company’s expansion strategy will be changed, with less focus on large out-of-town stores. As a result of this shift and following weak sales Tesco is looking to close its furnishing chain Home Plus.
Tesco is understood to be looking at giving up the leases it holds at all 13 stores, two of which are already being formally marketed. However, Tesco faces difficulties in passing on the leases which have been granted for 15 or 20 years and on unfavourable terms.
This announcement highlights that a lease can be both a burden and a benefit depending on supply and demand or generally how buoyant or otherwise the economy is. In the current market it is possible for a tenant to negotiate a very attractive deal and would not expect to agree to a long lease on unfavourable terms.
If Tesco is unable to find new tenants it is likely to leave the stores open.
