Margareta Pagano: Tesco has not passed it's sell-by date, but its blunders are costly

Listening to Philip Clarke, Tesco's chief executive, explaining on radio last week why the supermarket giant has just reported the first fall in profit in two decades left me feeling distinctly queasy.

He was suitably contrite about the £1.2bn hit that Tesco is taking after writing off the costs of the 199 Fresh & Easy stores that it opened in the US and which are now being sold or closed. What he didn't say was that when Tesco first trumpeted its US invasion only five years ago, the plan had been for 1,000 shops across the country.

That it could have so misjudged the US market – and the way the Americans eat – rather begs the question as to who on earth compiled the research on which such a huge investment was made? And why did the board, then led by Sir Terry Leahy, launch such a mega-leap into the dark with such gusto?

Clarke also admitted that Tesco had misjudged the "space race" between UK supermarkets to build hypermarkets; leading to the £804m property write-down. He also conceded the retailer had been slow off the mark to move online.

That's three whopping errors, quite apart from the neglect of the UK stores and the mis-selling of payment protection insurance. They come at a huge cost: analysts say the write-downs are equivalent to 15 months of shareholder dividends. So the question is: how did such a brilliant retailer come to make such blunders? Did bosses get too big for their boots?

Tesco's managers have a reputation for bullying tactics, particularly with suppliers, but have to date always also been ruthless in their attention to detail. Such mistakes are unlikely to have happened under Sir Ian Maclaurin or the early part of Leahy's reign.

Even so, these latest troubles are by no means the end of the Tesco empire; its far too powerful and profitable for that. But care needs to be taken over its other overseas conquests. Indeed, it was when Clarke started talking excitedly about China and the huge prospects there that I couldn't help get the most awful sense of deja vu.

After its horrible US give-away, Tesco really can't afford a Chinese take-away.