In recent years, Migros has been going through a cost-saving phase and implementing significant clean-up measures. Despite expert advice to divest from Tegut, the company has decided to hold on to the German supermarket chain. Meanwhile, several subsidiary companies like Melectronics, Sport X, Hotelplan, and Mibelle are set to leave this year.
Migros Zurich acquired Tegut in 2012 with hopes of expanding and generating additional income. However, twelve years later, it has become evident 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 moving forward with a focus on core business in Switzerland. Despite assurances from Migros Zurich of returning to profitability in 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 the company’s strategic focus.
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 it evaluates its options.
The future of Tegut remains uncertain amidst broader restructuring efforts within the organization.
