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."
The Independent's live blog of today's Premier League action
- 1 Scottish referendum: So how about the English now being given a chance to split from England?
- 2 Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
- 3 Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
- 4 Matthew Miller: American sentenced to hard labour in North Korea 'wanted to be Snowden II'
- 5 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
4Chan naked photos leak: Celebrity Twitter reactions to the mass breach of privacy
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Archbishop of Canterbury admits doubts about existence of God
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...