Tesco is exploring a sale of its central and eastern European operations, according to reports published on Wednesday, in a move that would end the supermarket group's three-decade international expansion strategy and strengthen its ability to invest in its core UK business.

The Financial Times reported that Tesco is working with bankers to examine options for its businesses in Hungary, the Czech Republic and Slovakia, which employ more than 22,000 people. The retailer declined to comment on the reports, with a spokesperson saying: "We never comment on rumour or speculation."

The potential disposal would leave Tesco focused almost entirely on the UK and Ireland after years of retreating from overseas markets.

The company has already sold businesses in South Korea, Thailand and Malaysia since its 2014 accounting scandal, while its loss-making Fresh & Easy venture in the United States was closed in 2013 after costing shareholders more than £1 billion.

According to Tesco's latest annual report, the central and eastern European division operates 561 stores and generated revenues of £4.5 billion in the 2025-26 financial year. The business contributed £115 million of adjusted operating profit, accounting for around 4 per cent of the group's £3.2 billion total, on overall group revenues of £66.6 billion.

Analysts have long viewed the division as an outlier because Tesco has spent more than a decade simplifying its international footprint to concentrate on its domestic market. The company has continued investing heavily in the UK, where it holds a market share of around 28 per cent and is expanding stores while funding Clubcard promotions and price-matching initiatives.

The business has faced increasing competitive and regulatory pressure in central Europe. In its most recent annual report, Tesco said profits in its eastern operations had fallen because of stronger competition in Slovakia and rising regulatory costs, prompting a £75 million write-down in the value of stores in the region.

A sale would represent a change in tone from Tesco's previous position. In 2023, chief executive Ken Murphy said the European operations were "an integral part of the group and a successful part of the group, and they don't distract us very much from the core business". Since taking over in 2020, Murphy has overseen a significant recovery in Tesco's performance, with the company increasing shareholder returns, investing further in technology and strengthening its position in the UK grocery market.

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