Key insights
- Rewe is considering selling its Penny Market chain in Italy due to challenges in the Italian retail market, including slowing consumer spending and intense competition. Potential buyers include Lidl and Aldi. This reflects broader difficulties for international retailers in Italy, but has limited direct implications for US equities.
Investing.com -- German supermarket group Rewe is considering selling part or all of its Penny Market business in Italy as it reviews its presence in the country, Bloomberg reported on Sunday, citing a report from Italy’s Corriere della Sera.
According to the report, Rewe is evaluating options that could include a full exit from the Italian market, where Penny operates nearly 500 stores and generates close to €2 billion ($2.3 billion) in annual revenue.
Potential buyers could include German discount retailers Lidl and Aldi, which have expanded steadily across Europe and maintain a growing presence in Italy.
Corriere said a transaction would represent a shift in strategy for the two companies, which have historically relied on organic expansion rather than acquisitions.
Penny has operated in Italy since 1994 and remains one of the country’s largest discount supermarket chains.
Rewe previously reduced its exposure to the Italian market through the sale of its Billa supermarket business more than a decade ago.
Most of the former Billa stores were acquired by French retailer Carrefour and Italian cooperative Conad.
Corriere suggested a similar breakup of Penny’s operations could be considered if Rewe decides to proceed with a sale.
Italy has become an increasingly difficult market for large supermarket operators as slowing consumer spending, intense price competition, and demographic challenges pressure profitability.
The sector has undergone significant consolidation in recent years.
Last year, Carrefour agreed to sell its Italian operations to food group NewPrinces for a symbolic equity value of €1, marking the French retailer’s exit from a market where it had struggled to generate sustainable returns.
The deal highlighted the challenges facing international retailers in Italy, where fragmented competition and thin margins have made growth increasingly difficult.
Neither Rewe nor Penny immediately commented on the report, according to Bloomberg.