Partly Cloudy

Partly Cloudy

max temp: 16°C

min temp: 11°C

ESTD 1874 Search

UK: Tesco signals withdrawal from US market as UK sales fall back into the red

09:15 05 December 2012

Tesco has reported its third-quarter sales figures

Tesco has reported its third-quarter sales figures

Archant

SUPERMARKET giant Tesco signalled an embarrassing retreat from the US today and admitted a key part of its performance in the UK was still not good enough.

shares

The supermarket giant, which recently reported its first drop in profits in 20 years, confirmed it was launching a review of its US operation Fresh & Easy that could see the chain sold off.

Tim Mason, who ran the US business and has been with Tesco for 30 years, will leave the company.

In the UK, Tesco said its sales fell back into the red in its third quarter after a poor non-food performance held back improvements in its grocery arm.

Chief executive Philip Clarke admitted the non-food performance was “not good enough” as the group reported a 0.6% fall in like-for-like sales excluding VAT and fuel in the 13 weeks to November 24.

The review could see the US business sold off, closed or placed into a partnership with another retailer, but the group admitted the process was likely to result in its presence in the US coming to an end.

Speaking from Los Angeles, Mr Clarke said the business and its 5,000 staff would continue to operate as normal while the review is ongoing.

Tesco said it had invested £1billion in Fresh & Easy since its launch in 2007, but the chain has never made a profit, losing £74million in the first half of this year.

Mr Clarke said his priority was to deliver long-term value for shareholders. “Whilst the business has many positives, its journey to scale and acceptable returns will take too long,” he added.

Tesco said it had already received approaches from a number of potential buyers for some or all of the US business. The group will report back on the Fresh & Easy review when it posts full-year results in April.

In the UK, today’s third-quarter figures show that, despite tough non-food trading, Tesco’s fightback against resurgent rivals is beginning to pay off. It grew grocery sales by 1.2% on a like-for-like basis and said it outperformed the market.

Market share data from Kantar Worldpanel yesterday revealed that Tesco had seen the best sales growth of the “big four” players in the four weeks to November 25 and grew its market share.

This came as a marked turnaround on recent declines when it lagged behind the performance of big rival Sainsbury’s.

But non-food sales continue to drag on its overall performance, with difficult trading in consumer electronics goods and a general fall in consumer spending hitting the group.

The group’s third-quarter sales decline follows growth of 0.1% in the second quarter.

Related articles

shares

0 comments

David Brown, chief executive of Go-Ahead.

Bus and train operator Go-Ahead today reported increased underlying annual profits, helped by an improved performance from its rail business.

Artist's impression of the new KFC proposed for Stane Park, Stanway

KFC has been announced as the latest name to sign up for a proposed leisure park in Stanway.

Roger Buston, right, principal at Asher Prior Bates, and Adrian Livesley, managing partner of Birkett Long.

Essex law firm Birkett Long has expanded again with the addition of Colchester-based Asher Prior Bates – its sixth acquisition in as many years.

The first departure of the Port of Felixstowe's 31st daily rail freight service, to Birch Coppice.

The Port of Felixstowe today saw the launch of its 31st daily rail freight service.

Maria Peyman of Birketts with colleagues Katherine Shadbolt and Kitty Rosser.

Maria Peyman has joined the commercial litigation team at law firm Birketts as a senior associate.

Holiday parks group Park Resorts is to merge with rival operator Parkdean.

The UK’s biggest holiday park operator is to be created through a £960million merger deal involving Parkdean and Park Resorts.

Halfords has reported a fall in bike sales over the past two months.
Photo: Newscast/Mathew Growcoot

Halfords today reported a slump in bike sales over the last two months amid rainy weather and heavy discounting.

ASOS chief executive Nick Robertson, who is stepping down with immediate effect.

Online fashion retailer ASOS said today that its chief executive Nick Robertson is to step down with immediate effect from the helm of the company he founded 15 years ago.

EADT BUSINESS

Chris and Hayley Lee, pictured outside The Bildeston Crown

PICTURE CONTRIBUTED 

EADT 20/9/07
EADT 22/12/07
EADT 25.4.09

A couple who held senior posts at a country hotel-restaurant when it won a clutch of awards has returned.

Aga is at the centre of a takeover tussle after revealing US electronic appliances giant Whirlpool was considering a bid to rival Middleby's £129 million offer.

Upmarket cooker firm Aga Rangemaster is at the centre of a takeover tussle after revealing US electronic appliances giant Whirlpool was considering a bid to rival Middleby’s £129 million offer.

Most read

Most commented

Topic pages