British retail giant Tesco today confirmed that it is exiting from its loss-making US operations, as it announces its first drop in annual profits in two decades.
The company saw pre-tax profits fall 52 per cent to £1.96bn for the year ended 23 February 2013, from £4bn the previous year.
Britain’s largest retailer says that it is in the “well-advanced” stages of exiting the US, where it has written down its unprofitable Fresh & Easy business by £1.2bn.
It also wrote down its UK property investments by £804m.
Traditionally one of the most consistent companies in the UK, Tesco issued a profit warning last year and reinvested £1bn in an attempt to regain market share against competitors such as J Sainsbury and Asda.
Profits in its domestic market fell 8.3 per cent this year, to £2.3m.
“The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today,” said chief executive Philip Clarke.
“We have set the business on the right track to deliver realistic, sustainable and attractive returns and long-term growth for shareholders.
“The consequences are non-cash write-offs relating to the United States, from which we today confirm our decision to exit, and for UK property investments which we will not pursue because of our fundamentally different approach to space.”