Tesco May Abandon U.S. Fresh & Easy Stores

LONDONTesco Plc, the largest grocery chain in the United Kingdom, has ordered a strategic review of Fresh & Easy retail stores in the United States and indicated it will likely pull out of the U.S. retail sector after five years of unprofitable business. Tesco also announced its Fresh & Easys CEO Tim Mason will leave the company after 30 years of service.

A company statement released Dec. 5 said: In October, we announced that new capital investment in Fresh & Easy was to be tightly constrained whilst the business focused on reducing costs and improving the profitability of its existing stores. It is now clear that Fresh & Easy will not deliver acceptable shareholder returns on an appropriate timeframe in its current form. We have therefore appointed Greenhill to assist with the review of options."

The company has been approached over the past few months by several parties interested in acquiring either all or part of Fresh & Easy, or in partnering with Tesco to develop the Fresh & Easy business.

Commenting on the decision, Tesco CEO Philip Clarke 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.