Migros, a Swiss retail giant, is currently going through a cost-saving phase and implementing significant clean-up measures. Despite the expert advice to divest from Tegut, a German supermarket chain that has been consistently in the red for twelve years, the company has committed to retaining it.
Migros Zurich acquired Tegut in 2012 with hopes of expanding and generating additional income. However, the plan did not yield the expected results, resulting in persistent losses for the company. The unique positioning of Tegut as a premium supermarket in a price-sensitive market like Germany posed challenges for the company. Trading expert Thomas Roeb emphasizes the need for Migros to exit quickly from Tegut to avoid further losses and suggests selling the company and absorbing depreciation while focusing on core business in Switzerland.
Despite assurances from Migros Zurich that Tegut would return to profitability by 2024, its results are not expected to improve until after that year. The persistent losses from Tegut have raised concerns among Migros executives about deviating from the company’s strategic focus. With tough market competition in Germany and changing consumer behavior making it challenging to sustain Tegut, divestment may become inevitable for Migros as it evaluates its options. The future of Tegut remains uncertain amidst broader restructuring efforts within the organization.
However, despite this news, there is hope that Tiguts financial struggles will soon come to an end with their restructuring efforts and new management strategies being put into place.
The decision by Mikros Zurich to retain Tigut despite expert advice suggests that they see potential in the brand and want to continue building on it rather than cutting their losses and moving on. This approach could be seen as risky but also strategic if successful.
Overall, it remains to be seen what will happen with Tigut moving forward but one thing is clear; Mikros is determined not to let go of their German subsidiary without a fight.