Tesco may shut US store chain

Tesco's standing as the most successful UK retailer has suffered further as it prepares to shut down its loss making US business even as it posted dismal sales figures in the UK and other countries for the last three months.

The US operation's failure, following over £1 billion in investment, has also cost the retailer's deputy chief executive, Tim Mason his job. Mason, took charge of the US business with the opening of the first Fresh & Easy store near Los Angeles five years ago, had spent 30 years with the grocer. He is expected to take a payoff of around £5.7 million.

Tesco chief executive Philip Clarke has turned to advise from investment bankers over the future of  Fresh & Easy chain, which operates 200 stores. He admitted, though that Tesco would likely quit the business, which it had once hoped to build into a huge chain that could challenge Walmart.

There was also bad news for Clarke from the UK as sales at Tesco's 3,000 UK outlets over the three months to the end of November fell 0.6 per cent, with non-food sales – mainly fashion and homeware seen to be "not good enough". 

Rival Sainsbury by way of comparison recently reported a 1.7 per cent increase and had been gaining market share. Tesco's performance in Europe had taken a hit amid continuing eurozone crisis and sales in Asia were also in decline. Among the worst affected were Poland, Slovakia and the Czech Republic according to Clarke.

Fresh & Easy, with 19 stores in the Bay Area, had promised a new approach on arrival -  relatively small stores of about 10,000 square feet to 15,000 square feet.