Gov't spokesman: Tesco layoffs not our fault

Competition

The latest announcement by Tesco that blames the new regulations on supermarket fees for the pending closure of 13 Hungarian units and layoffs of more than 500 workers is not true, Hungarian government spokesperson Zoltán Kovács (pictured) charged yesterday.

The past “aggressive expansion policy” of Tesco is what made the company unprofitable, Kovács said. The spokesperson added that “it is clear that the parent company of Tesco, headquartered in Great Britain, has recently been encountering problems that cost the company £260 mln”.

A new regulation on supermarket operation fees hits Tesco and other hypermarkets much harder than its Hungarian owned competitors, and Tesco said that change is what is forcing it to close its stores. Kovács rejected that claim.

The recent downgrade by Moody’s, Tesco’s steep slide on the stock exchange and problems in the company’s leadership are more likely contributors to Tesco’s current decision than the Hungarian government’s market protection policy,” Kovács said.

Tesco has not yet answered the Budapest Business Journal's request for a response.

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