Tesco urged to quit US to get UK operation back on track
Sunday 08 April 2012
Tesco was facing fresh scrutiny today after a leading shareholder said quitting America would help it get its UK operation back on track.
The comments from Richard Black at Legal & General Investment Management, which is Tesco's third biggest shareholder with a 4% stake, come days before chief executive Phil Clarke unveils his blueprint for reviving the chain.
As well as an exit from the loss-making American operation Fresh & Easy, Mr Black has suggested Tesco ditches banking in order to concentrate on the core grocery side of the business in the UK.
He said in the Sunday Times: "Strategically, the business needs to think about its capital allocation and return on capital.
"It needs to think long and hard about what it wants to be - can it be everything to everyone, or should it focus on its gem, the British grocery business? Of course, this is likely to raise questions about other areas of the business, such as America and the bank."
Tesco's shares are down 21% this year, compared with 2.2% at Sainsbury's, after a first profits warning in two decades in January.
Justin King, the chief executive of rival Sainsbury's, said he believed customer service was the key difference between the two chains.
In an interview with the Sunday Telegraph, he said: "They have not executed well for customers.
"All retailers struggle when they stop doing a great job for customers. It was true of us during the 1990s. We've been able to see for a long while that what we deliver in service in our shops is significantly better than Tesco."
Tesco's Mr Clarke, who took over as chief executive last year, is expected to unveil a major culture change at the retailer to make it a "warmer" proposition for customers.
According to the Sunday Times, he is expected to say that the UK business must focus less on one-off discounts and look instead to lower prices across the board, focusing on value. And recent innovations at 200 stores will be extended across all its 2,800 UK shops after they resulted in improved sales.
A Tesco spokesman said: "We stay close to investors and know what they expect of Tesco.
"We have a clear target for break even in the US and in January we reported that Fresh & Easy had continued its strong run of form.
"In the UK, we began our investment plan last summer, accelerated the pace in January and have already announced important initiatives including a major investment in price, 20,000 more staff in stores, and the launch of the Everyday Value range.
"We will set out the plan in more detail to investors later this month."
- 1 Which country would be hardest to invade?
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
- 5 Teen suffers embarrassing wardrobe malfunction in front of deputy PM
Which country would be hardest to invade?
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
The man who filmed the Freddie Gray video has been arrested at gunpoint
UK weather: Severe weather warning for snow and torrential rain over bank holiday weekend
Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
Indonesia executions live: 'Hysterical' families heard prisoners being shot dead by firing squad
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
EU exit would hit UK economy much harder than neighbouring countries, study finds
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...