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Poland: 250 Netto transformed of 301 Tesco stores and 2 DCs. Cost: US$176 million

Discount Retail Chain Netto Poland (owned by Danish Salling Group) acquired 301 stores in and two distribution centers from Tesco in Poland, last year. Today Netto has finishing the conversion process. 250 stores changed the brand. Netto has invested PLN 750 million (US$176Mn) in this process. Today Netto is a nationwide network, said Hugo Mesquita, head of the Danish network in Poland. The company does not rule out further acquisitions on the Polish market.

Netto has completed the difficult process of converting Tesco to Netto. We recently moved to a new office building in Szczecin, in the Baltic Business Park, where we can conveniently receive our contractors. We have been present in Poland for 26 years. We want to be in the top five largest chains as the fastest growing discount store. Poles love this format. The segment has great potential. It has 35 percent. market share, said the head of the Netto network at the press conference.

250 stores changed their brand from Tesco to Netto. Our first signboards were displayed in Tesco stores at the end of May 2021, which means we completed the process in less than a year. We have 3 distribution centers, 340 stores in the 3.0 concept. and 650 stores across the country. We note double-digit sales growth yoy and 2.5 million customers who shop with us every day. We are already a nationwide network, summed up Hugo Mesquita. The Netto brand appeared in 119 Polish towns where it was not present. Today, Netto is available all over Poland. Approx. 4 thousand people have passed to us from Tesco. employees, we also cooperate with almost all Tesco suppliers, added the head of the chain. Netto representatives explained that some of the stores were put up for sale. It's about 20 outlets. They will include, among others retail parks. In other cases, the network simply did not extend the lease, including due to the fact that the store was too close to another location of the chain or was simply too big for the Net. Among the acquired Tesco stores, approx. 200 stores are typical supermarkets, while over 40 stores were large stores with an area of 2 thousand sqm Some of the space in these outlets is leased by other tenants, such as Action.

The sales of the Netto chain grew at the rate of +7%. per year, and in 2021 it was approx. +15 percent. This year the chain wants to open about 15 stores and modernize over a dozen or so.

Transformation in days: - Tesco store equipment disassembly took about 5 days - construction and installation works take approx. 21 days - the installation of cooling devices lasted about 5 days - assembly of racks and rebranding takes about 3 days - stocking up took about 4 days

Milestones - June 2020, the contract with Tesco was announced. The value of the transaction is approximately PLN 900 million (US$211Mn) - March 2021 consent of the Office of Competition and Consumer Protection and finalization of the transaction - On May 27, 2021, the first Tesco stores get a new sign - September 22, 2021 100 Tesco stores converted - October 31, 2021, the last Tesco store in Poland is closed - March 2022 end of Tesco to Netto conversion

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