In recent times, Migros Cooperative Zurich has been undergoing cost-saving measures and implementing significant clean-up initiatives. Despite expert advice to divest from the German supermarket chain Tegut, the company is determined to retain it. Meanwhile, several subsidiary companies like Melectronics, Sport X, Hotelplan, and Mibelle are set to leave this year.
The acquisition of Tegut in 2012 was part of Migros Zurich’s plan to expand and generate additional income. However, twelve years later, it is clear that the strategy did not yield the expected results. Tegut has consistently been in the red and has resulted in significant losses for Migros. The unique positioning of Tegut as a premium supermarket in a price-sensitive market like Germany has presented challenges for the company.
Trading expert Thomas Roeb emphasizes that Migros must exit quickly from Tegut to avoid further losses. He recommends selling the company, absorbing the depreciation, and focusing 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 tough market competition in Germany and changing consumer behavior have made it challenging for Migros Zurich to sustain Tegut as it currently stands. With the need to refocus on its core business and mitigate further losses, divesting from Tegut may become inevitable for Migros.
As the company evaluates its options amidst broader restructuring efforts within the organization, the future of Tegut remains uncertain.