Published December 05, 2012
LONDON – Britain's Tesco, the world's No. 3 retailer, has launched a strategic review of its loss-making United States chain Fresh & Easy that could lead to a sale or closure of the business.
Announcing the review alongside a third quarter trading update on Wednesday Tesco said it would report the results of the review when it issues full-year results in April.
It said all options were under consideration for the business and it has appointed Greenhill to assist in the review.
Tesco said it has had a number of approaches from parties interested in acquiring either all or part of Fresh & Easy, or in partnering with the firm.
It added that Tim Mason, Fresh & Easy's CEO, is leaving Tesco after 30 years with the group.
The 200-stores Fresh & Easy chain, having absorbed nearly 1 billion pounds ($1.6 billion) of capital since its 2007 launch, remains stubbornly loss-making in the cut-throat U.S. grocery market and Tesco Chief Executive Phil Clarke has been under increasing pressure from investors and analysts to act.
Tesco also posted a return to falling quarterly underlying sales in its home market on Wednesday, raising questions over whether its 1 billion pounds recovery plan is struggling to gain traction.
The firm, which takes about one in every 10 pounds spent in British shops, said sales at UK stores open over a year, excluding fuel and VAT sales tax, were down 0.6 percent in the 13 weeks to November 24, its fiscal third quarter.
For the group total third quarter sales increased 2.4 percent. ($1 = 0.6209 British pounds)
(Reporting by James Davey; editing by Kate Holton)