Newspaper article International Herald Tribune

After 5 Years of Losses, Tesco Says It's Ready to Turn Its Back on the U.S. ; Grocery Chain to Focus on Reviving U.K. Profit and Expanding in Asia

Newspaper article International Herald Tribune

After 5 Years of Losses, Tesco Says It's Ready to Turn Its Back on the U.S. ; Grocery Chain to Focus on Reviving U.K. Profit and Expanding in Asia

Article excerpt

The British supermarket chain said it was considering "all options" for its Fresh & Easy food shops, which have been unprofitable.

Tesco, the British supermarket giant, said Wednesday that it was likely to exit the United States after announcing a review of its Fresh & Easy food stores, which have remained unprofitable despite five years of investment.

Tesco said that it was considering different options for the business and that it had in recent months been approached by several parties to buy all or parts of Fresh & Easy. Tesco said it might also team up with other companies.

Tim Mason, Fresh & Easy's chief executive, will leave Tesco after more than 30 years with the company, it added.

Aldi Group, the German discount supermarket chain, could be among those interested in acquiring the business, while Wal-Mart Stores could bid for parts of it, analysts said.

"It is now clear that Fresh & Easy will not deliver acceptable shareholder returns on an appropriate timeframe in its current form," Tesco said.

The Tesco chief executive, Philip Clarke, said during a conference call Wednesday that it was "likely that our presence in America will come to an end."

Mr. Clarke turned his focus on the company's home market this year with a $1.6 billion investment program to reverse a drop in profit in Britain. The decline had alarmed some investors, who had criticized Tesco for falling behind rivals at home while plowing money into an expansion abroad, including into the United States, that failed to pay off.

"They've given it a good go in the U.S. but clearly it has proven to be more difficult than they believed it to be," said Robert Talbut, chief investment officer at Royal London Asset Management.

Tesco started its Fresh & Easy brand about five years ago, hoping to have discovered a market niche for smaller stores offering warm meals. But despite pouring as much money into in Fresh & Easy as it invested in its British operations -- Pounds 1 billion, or $1. …

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