French group Auchan Retail sells its Italian subsidiary to Conad

Shopping trolleys are seen at the entrance of an Auchan Hypermarket store Shopping trolleys are seen at the entrance of an Auchan Hypermarket store in Saint-Sebastien-Loire near Nantes, France, April 30, 2019. REUTERS/Stephane Mahe

PARIS (Reuters) - French supermarket group Auchan Retail has agreed to sell almost all the activities of its loss-making Auchan Retail Italia arm to Conad, the Italian co-operative retail group.

The French retailer had said in March that it was conducting a review of its loss-making markets, such as Italy and Vietnam where it has faced tough market conditions.

When asked about the financial terms of the deal, an Auchan spokesman said: “The business was in great difficulties. We are leaving to Conad a financial situation that will allow it to succeed with its acquisition project.”

With around 1,600 stores in Italy, Auchan Retail generated some 3.6 billion euros ($4.1 billion) in revenue in Italy last year.

In 2017, Auchan launched a three-year plan to modernize its hypermarkets, accelerate online expansion and focus more on smaller convenience stores. It already closed 23 loss-making stores in Italy last year.

The Italian disposal will be finalised following approval from the Italian competition authority, and the sale does not apply to the 33 non-franchised supermarkets located in Sicily or the 50 Lillapois drugstores.

($1 = 0.8898 euros)

Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta