Retailer Tesco is to sell its operations in Japan, after a review of its Asia business found it could not build a large enough business.

The company currently operates 129 stores in the Greater Tokyo area, about half of which are profitable. Japan is the smallest of Tesco's international retail businesses, which also include India, China, Thailand, Malaysia and South Korea.

Chief executive Philip Clarke said the company would try to sell the stores and a formal sale process would take place in the coming months.

"We have reviewed our portfolio in Asia and the performance of our business in Japan. Having made considerable efforts in Japan, we have concluded that we cannot build a sufficiently scalable business," he said. 

"We have decided to sell our operations there and focus on our larger businesses in the region, in line with our priority of driving growth and improving returns."