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

Tim Mason, the chief executive of Tesco's US 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.

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

Tim 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.