Tesco eyes an exit from US as it axes Fresh & Easy boss

Supermarket giant loses £850m in five years in America and UK sales slip back again

Tim Mason, the chief executive of Tesco's United States business, has paid the price for losses of £850m over five years at its troubled Fresh & Easy operation, as the group admitted it was "likely" to exit America.

The world's third-biggest grocer said it has launched a strategic review of its 199-store operation in California, Nevada and Arizona, which could see it sold, closed or made into a joint venture, alongside posting a further decline in underlying UK sales in its third quarter.

Philip Clarke, Tesco's chief executive since March 2011, hinted at a bust-up with strategy over Mr Mason, a Tesco veteran of more than 30 years, who is also its group deputy chief executive.

Speaking from Los Angeles yesterday, he said: "I did not think it was appropriate for Tim to lead the review. I wanted a fresh pair of eyes to run the business so it was my decision [for him to leave]."

He added: "It's likely but not certain that our presence in America will come to an end." Credited with creating the Every Little Helps slogan, Mr Mason is leaving after Tesco failed to crack the US market despite investing £1bn in Fresh & Easy since launching to a fanfare in November 2007.

The supermarket giant's expected exit from the US follows other high-profile UK failures in America, including Sainsbury's selling its Shaw's business in 2004 and Marks & Spencer offloading its Brooks Brothers chain in 2001.

Of this country's biggest retailers, only Sir Philip Green's fledgling Topman and Topshop operation in the US appears to be succeeding, with the billionaire poised to sell a stake of 25 per cent in the two chains to the private-equity house Leonard Green & Partners for £250m.

While investors welcomed Mr Clarke calling time on the loss-making US chain and its shares rose by 10.8p to 337.45p, the review of Fresh & Easy is the latest setback for Mr Clarke.

Following years of its underlying sales trailing UK rivals, Tesco unveiled its first profit warning in January in 20 years and three months later a £1bn investment to turn around its domestic business.

Mr Mason, 54, who is also the group's head of marketing, is leaving with immediate effect and is the latest executive to exit since its former boss Sir Terry Leahy handed over to Mr Clarke last year. Its former finance director Andy Higginson, e-commerce chief Laura Wade-Gery, Asian boss David Potts and Richard Brasher, who was its UK chief executive, have all left.

Mr Clarke yesterday said Fresh & Easy's underlying sales growth had slowed to a "trickle" of just 1.8 per cent over the 13 weeks to 24 November, admitting it had been "too hard" to convince US consumers to shop at its 10,000 square feet stores instead of their traditional reliance on big-box shops of over 150,000 sq ft.

Tesco has hired advisers at Greenhill for the strategic review, adding it had received in recent months a "number of approaches from parties interested in acquiring either all or part of Fresh & Easy, or in partnering with us to develop" the business.

Mr Mason, who received total pay of £1.63m last year, will receive a pay-off of £1.7m, including a year's salary, his expatriate allowance and a cash bonus.

In addition, he owns ordinary shares worth more than £6.6m and has accrued a pension pot of over £9m.

Mr Clarke described as "disappointing" at 0.6 per cent fall in Tesco's UK like-for-like sales in the quarter, with him blaming tanking demand for big-ticket items, such as electricals.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'