Tesco stacks up another loss at Fresh & Easy ...

... but chief executive will point to better figures for UK sales

Tesco's chief executive is likely to come under renewed pressure from investors this week over its US business, Fresh & Easy, which is set to post another painful half-year loss.

Alongside the group's first profit fall in nearly 20 years, Philip Clarke – who took the helm in March 2011 – will on Wednesday have to defend tumbling sales in South Korea, which is its biggest market outside the UK.

However, Mr Clarke will be able to point to improved UK trading in Tesco's second quarter, which accounts for more than 60 per cent of group sales and profits. This follows Tesco's unveiling, in April, of a £1bn investment to turn around its stuttering British business by recruiting 8,000 staff, introducing 1,800 new products and sprucing up its stores to give them a "warmer feel".

Fresh & Easy, which launched in November 2007, is forecast to post a disappointing loss of £70m over the half-year to 25 August, down slightly from £73m. This deficit will add to the losses of more than £700m suffered at the 199-store Fresh & Easy so far, although Tesco has set a delayed break-even target of February 2014.

Clive Black, the analyst at Shore Capital, said: "I think Philip Clarke is between a rock and a hard place. He has inherited a situation where there is not a lot of upside."

He added: "I think Tesco will try to stick at it and get it to break-even or profitability. This would put Tesco in a better position to consider its options, such as a possible trade sale or joint venture, if it did eventually decide to exit."

Overall, Tesco is set to post a 11.7 per cent fall in group pre-tax profits to £1.52bn over the half-year, according to Shore Capital, which is the group's first decline since 1994. The fall reflects the grocer's £1bn investment in its UK business, which followed its first profit warning in 20 years in January.

Deutsche Bank, Tesco's joint house broker, expects it to deliver a 0.1 per cent rise in UK like-for-like sales in its second quarter, an improvement on the 1.5 per cent fall in the previous three months.

However, Tesco's UK profits are set to fall by 13 per cent to £1.1bn, following a sharp fall in its operating margin to 5.1 per cent.

Overseas, Mr Clarke's biggest current headache appears to be in South Korea, where the government has recently introduced Sunday trading restrictions. This is expected to contribute to an 8 per cent fall in like-for-like sales in the second quarter in the east Asian country, although Tesco's operation in Thailand is forecast to be in positive territory, according to Deutsche Bank.

The mood at Tesco is unlikely to be helped by news from fierce rival Sainsbury's that same day, which is again expected to show its trading resilience by posting a 1.4 per cent rise in like-for-like sales over the 16 weeks to 29 September.

Suggested Topics
Life and Style
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
ebookA unique anthology of reporting and analysis of a crucial period of history
Luis Suarez looks towards the crowd during the 2-1 victory over England
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
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

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform