Tesco, the world's third-largest retailer, is to begin a strategic review of its US business Fresh & Easy, a clear signal to the industry and media alike that it plans to exit the US market.
Announcing the review, Tesco chief executive Philip Clarke also revealed that Fresh & Easy's chief executive Tim Mason was leaving after 30 years with the company.
Founded almost six years ago, Fresh & Easy has around 200 stores in southern California and Nevada.
Tesco has poured an estimated £1bn into the business since 2007 but notably failed to turn a profit.
While the company was expected to break even in 2013/14 – with Clarke telling the recent World Retail Congress in September that the division was 'worth persisting with' – it is clear the need to call time on an expensive venture that failed to deliver on its initial promise has become far more pressing.
'I have been clear since my appointment as CEO was announced that my role is to deliver long-term value for shareholders,' Clarke commented. '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.'
He added: 'Whilst the business has many positives, its journey to scale and acceptable returns will take too long relative to other opportunities.'
In October, Tesco announced that new capital investment in Fresh & Easy was to be 'tightly constrained' while the business focused on reducing costs and improving the profitability of existing stores.
It is understood the company has received a number of offers to buy all or part of Fresh & Easy, as well as proposals to develop the chain further as a partnership with outside investors.
