Tesco is “likely” to leave the US after launching a strategic review of its loss-making American business Fresh & Easy, said chief executive Phil Clarke. The chain has swallowed up around £1bn since its launch in 2007. The stores are likely to be sold or closed.
Tesco also reported a 0.6% fall in UK like-for-like sales (excluding fuel and VAT) in the third quarter, a setback after the uptick in the spring. That had been the first rise in 18 months.
What the commentators said
About time too, reckoned most analysts. Fresh & Easy was “a folie de grandeur of [Clarke’s] predecessor Sir Terry Leahy”, said Jonathan Guthrie on FT.com. “It was never going to succeed because of its limited scale, high costs and poor instinct for US tastes (its website offers the British ‘pub classic’ of shepherd’s pie under an ‘American kitchen’ banner).”
The spotlight is now back on the struggling UK core business, where the recovery plan launched earlier this year is clearly “struggling to take effect”, notes James Davey on Reuters.com. Tesco sells more non-food products than its rivals, and that’s where consumers have cut back most.
There may be more bad news, warned analysts at Espirito Santo. Their latest consumer survey suggests that only 29% of British consumers now choose to do most of their food shopping at a Tesco store or online, down from 34% in early 2012. This is a big change “for Tesco to recover from”.