By Margit Feher
BUDAPEST--The Hungarian arm of U.K. retailer Tesco PLC said on
Monday that it will close 13 of its stores to remain profitable, in
keeping with a new law that requires large food retailers to
generate a net profit for two consecutive years in order to stay in
business.
Tesco, which currently operates 222 stores in Hungary and is the
country's biggest food retailer based on annual revenue, will cut
several hundred jobs in the country as a result of the new
laws.
"In response to all of the legislation over the last few months,
we've completed a strategic review of our business, and to remain
profitable for the long-term, we've made the decisions to close
thirteen stores," said Nigel Jones, CEO of Tesco-Global Aruhazak
Zrt., the U.K. firm's Hungarian subsidiary, in an emailed video
interview.
The new law was adopted late last year after parliament approved
a steep increase in food-quality inspection fees for the biggest
retailers. Another new law was approved in December requiring
nearly all retailers, including Tesco, to remain closed on Sundays
from March 15, 2015.
The new measures are aimed at benefiting small, mostly
Hungarian-owned retailers, government representatives have
said.
Write to Margit Feher at margit.feher@wsj.com; Twitter:
@margitfeher
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