News Column

Fresh & Easy Owner Pulls Out Amid Slow Profits

April 17, 2013
Fresh & Easy

Retailer Tesco will pull out of the United States as part of a refocus on its British operations, the Hertfordshire-based company announced Wednesday as it posted annual figures showing a 13-per-cent drop in profits to 3.45 billion pounds (5.27 billion dollars).

The decision to pull the plug on its Fresh and Easy Chain - which operates 199 stores in the states of California, Nevada and Arizona - is a natural consequence of "the strategic changes we first began over a year ago," said chief executive Philip Clarke.

The goal is to "build a better Tesco" in Britain, said the company, which also cited difficulties with its holdings in South Korea and Europe.

The company said an unnamed third party had expressed interest in purchasing Fresh and Easy. Tesco stands to lose 1.2 billion pounds as a result of its US exit, mostly due to losses on properties and leases.

Tesco also noted it had already pulled out of Japanese operations this year and was taking a "more measured" approach to business in China.

The company said it would take a 804-million-pound loss by selling more than 100 sites it had purchased and never developed, in line with previously announced plans to reduce growth in stores in Britain. It noted that many of the properties now on sale had been purchased at higher points in the property cycle.

"We have set the business on the right track to deliver realistic, sustainable and attractive returns and long-term growth for shareholders," said Clarke. "Our focus is now on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns."

Wednesday's figures were based on data from the week ending February 23.

Tesco employs more than 620,000 people worldwide in 6,784 stores. Overall revenue for 2012/13 stands at 72.4 billion pounds, a 1.3-per-cent increase over the year before.

For more stories covering business, please see HispanicBusiness' Business Channel

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters