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 President of Argentina adopts Jewish godson to 'stop him turning into a werewolf'
- 2 Doctors remove 80 teeth from boy's jaw
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations
- 5 Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
Germany and ECB set for fight over money-printing
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
Syrian teenager Usaid Barho reveals how he escaped from Isis using a suicide vest
Sir Winston Churchill’s family begged him not to convert to Islam, letter reveals
Millions of Britons struggling to feed themselves and facing malnourishment
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Nigel Farage: Ukip leader named 'Briton of the year' by The Times
Immigrants make UK racist, says Ukip councillor Trevor Shonk
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...