TESCO shares climbed 3.3 per cent yesterday after chief executive Philip Clark revealed the likely closure of its loss-making US chain and the departure of the division’s head.
The supermarket giant has hired investment bank Greenhill to conduct a strategic review of Fresh & Easy that could lead to the sale or closure of its 200 stores.
Tim Mason, Tesco’s deputy chief executive who ran its US operations, has also quit with immediate effect after 30 years at the group.
He will walk away with £7.5m including one year’s salary worth £852,000, two-years’ bonus of £915,000 plus long-term share awards. He also has a £9m pension and holds 2m shares worth £6.6m.
Clarke admitted Fresh & Easy had failed to match US consumers’ interests and that the chain “is not going to achieve the scale and profitability it needs in a reasonable timescale”.
The business, which was the brainchild of former Tesco boss Sir Terry Leahy, has absorbed £1bn of capital since it first launched in 2006 but has failed to make a profit.
Clarke has been under increasing pressure from investors to act and analysts yesterday welcomed the move, estimating that an exit from the US, while costly, could cut group losses by about three per cent.
Tesco said several parties had expressed interest in buying all or parts of Fresh & Easy, or in partnering with Tesco on the venture.
The news came as Tesco said UK like-for-like sales had shrunk 0.6 per cent in the 13 weeks to 24 November. Clarke said food, the main focus of his rescue plan, grew 1.2 per cent but conceded its non-food performance “was not good enough”.