Photo: Wikimedia Commons
Britain’s biggest retailer, supermarket Tesco, looked on course to withdraw from its struggling US business Fresh & Easy as chief executive Philip Clarke on Wednesday said its presence would likely end.”It’s likely, but not certain, that our presence in America will come to an end,” Clarke told reporters, as Tesco said it was launching a strategic review of Fresh & Easy, which may lead to a sale of the business.
Investors welcomed the announcement, pushing Tesco shares up 3.6 per cent in early London deals.
Tesco added in a statement that Fresh & Easy chief executive Tim Mason was leaving the company with immediate effect after 30 years with the British group.
“Whilst the (US) business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities,” Clarke said in the statement.
“I have therefore decided to conduct a strategic review of Fresh & Easy, with all options under consideration.”
Tesco said it had received “a number of approaches” from parties interested in acquiring some or all of Fresh & Easy, or in partnering the company to develop the US business.
Clarke added: “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.”
Launched in 2007 by former Tesco chief executive Terry Leahy, Fresh & Easy has failed to turn a profit despite investment of about £1.0 billion ($1.6 billion, 1.2 billion euros).
Tesco said on Wednesday that Fresh & Easy’s sales performance fell below 2.0 per cent during the British company’s third quarter.
It added that revenues from its stores in Britain open more than a year, and excluding income from value added tax and petrol sales, fell 0.6 per cent in the three months to November 24.
Earlier this year, Tesco struck a deal to exit its Japanese business after nine years.
Tesco shares jumped 3.60 per cent to 338.4 pence following Wednesday’s announcements and in early trading on London’s benchmark FTSE 100 index, which was up 0.46 per cent at 5,895.85 points.
Copyright (2012) AFP. All rights reserved.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.