Today I’ve announced Tesco’s decision to begin a strategic review of Fresh & Easy, our business in the US. We’re considering all options for the business, but it’s likely that the review will lead to Tesco exiting the US market, so I wanted to explain the thinking behind our decision to our colleagues and customers at Fresh & Easy and the rest of the business.
It feels like a long time ago now, but when Tesco announced plans to open a business on the west coast of the US in 2006, the global economy was flying; not even the brightest economists in the world could foresee the unprecedented crisis in the markets about to engulf the world.
But when it hit, it hit hard. And those states in the US where we were trying to build a presence – California, Nevada and Arizona – were particularly affected by the sub-prime crisis. Launching Fresh & Easy in the world’s most competitive retail market was never going to be easy, but the economic backdrop made the task twice as hard.
As Chief Executive of Tesco, I have to focus on those markets which can deliver the high returns which our shareholders rightly expect. Where they don’t, it’s my job to take action, as I did when we pulled out of the Japanese market earlier this year. These decisions aren’t easy, but making the tough calls at the right time is a vital part of the Chief Executive’s job.
Having assessed its long-term potential, we’ve concluded that Fresh & Easy is not going to achieve the scale and profitability it needs in a reasonable timescale. That’s why we’re starting the review we’ve announced today, and my aim is to provide an update on progress with our full year results in April.
One thing which hasn’t changed since 2006 has been the commitment of our fantastic colleagues in Fresh & Easy - they have worked incredibly hard to improve the performance of the business.
I know they will be feeling nervous today, but I can assure them that as we go through this process, how we do the best for them will be at the top of my mind. Fresh & Easy is a good business in which we’ve already had interest from others. I know that the whole team there will continue to provide great service to our customers during this time.
One valued colleague who is leaving us today is Tim Mason, who has dedicated thirty years to Tesco and played an important part in turning it into the business it is today. We’ve worked together at Tesco through a time of remarkable growth and innovation, and he leaves with my thanks and best wishes.