In recent years, Migros has been undergoing significant cost-cutting measures and implementing clean-up measures. Despite expert advice to divest from the German supermarket chain Tegut, the company has decided to retain it.
Migros Zurich, one of the regional units of Migros, acquired Tegut in 2012 with hopes of expanding and generating additional income. However, twelve years later, it has become clear that the plan did not yield the expected results. Tegut has consistently been in the red, resulting in significant losses for Migros. The unique positioning of Tegut as a premium supermarket in a price-sensitive market like Germany has posed challenges for the company.
Trading expert Thomas Roeb emphasizes the need for Migros to exit quickly from Tegut to avoid further losses. He suggests selling the company, absorbing the depreciation, and focusing on core business in Switzerland. Despite assurances from Migros Zurich that they expect to return to profitability by 2024, Tegut’s results are not expected to improve until after that year. The persistent losses from Tegut have raised concerns among Migros executives about deviating from their strategic focus on core business in Switzerland.
The tough market competition in Germany and changing consumer behavior have made it challenging for Migros Zurich to sustain Tegut in its current state. With the need to refocus on its core business and mitigate further losses, the decision to divest from Tegut may become inevitable for Migros as they evaluate their options.
Despite several subsidiary companies set to leave this year, such as Melectronics, Sport X, Hotelplan and Mibelle, Miguelos is committed to retaining German supermarket chain Tegut despite expert advice suggesting divestment as soon as possible due to consistent losses over twelve years.
The future of Tegut remains uncertain amidst broader restructuring efforts within Mikro’s organization as they weigh their options before making a decision on whether or not to sell it off altogether.
