Tesco in US retreat
Tesco has announced it will undertake a review of its loss making US chain Fresh & Easy, as CEO Tim Mason is set to leave.
In a statement, the retailer said it was clear that Fresh & Easy will not deliver acceptable shareholder returns within an “appropriate timeframe.”
Tesco said “all options” were under consideration, leading to speculation that it might retreat from the brand.
According to the statement, there had been a number of approaches from parties interested in acquiring all, or part of the business.
Like-for-like sales performance of the Fresh & Easy brand fell below 2%, prompting the announcement of the review.
Philip Clarke, chief executive, said: “I have been clear since my appointment as CEO was announced that my role is to deliver long-term value for shareholders. Following a year in which my priority for Fresh & Easy was to improve its performance, I have now made a fully-informed assessment of its longer term potential.
“Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities. I have therefore decided to conduct a strategic review of Fresh & Easy, with all options under consideration.
“Tim Mason, who leaves Tesco today, has played an important part in our success over a 30 year career with the company, and he leaves with my thanks and good wishes.”
In a separate trading update, Tesco revealed UK non-food sales were lagging as consumer demand remained weak across the marketplace.
Like-for-like sales, excluding both VAT and petrol, fell by 0.6% in the third quarter. Tesco’s online grocery business delivered sales growth of 15%.
Internationally, sales growth was particularly strong in Thailand, and Malaysia and Korea also experienced improvement in like-for-like performance.
Mr Clarke added: “Our general merchandise performance overall in the UK was not good enough, and we are renewing our efforts to deliver sustainable, profitable growth in this part of the business.
“We have seen a further weakening in consumer spending in Central Europe, although the effects of this have been partly offset by a better quarter in Asia.”