Change to Win has launched a fresh attack on Tesco's US operations.

During Tesco's AGM on Friday (29 July) the group reiterated calls for Tesco to "increase transparency" at its US business, Fresh & Easy. CtW is comprised of four unions representing over 5.5m workers in North America.

While the impact that CtW will likely have on Tesco's strategy is minimal, it seems likely the UK retailer will not welcome the spotlight once again being cast on its loss-making US unit.

Tesco's foray into the well-developed and highly-competitive US market has attracted criticism since Fresh & Easy opened the doors to its first store in 2008. The group has faced down criticism from the City, with analysts and investors repeatedly suggesting the firm should cut its losses and pull out from the market.

The business has yet to make a profit but, in Tesco's last financial year, which ran until 25 February, losses from its US division fell 17.7% to GBP153m.

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Tesco rejects shareholder calls to address US woes

Tesco's annual general meeting today was dominated by shareholder
questions about its struggling US subsidiary, Fresh & Easy. Yet despite
evident shareholder concerns, Tesco directors refused completely to address
recent criticisms, which in our view are well-founded, of its management of its
loss-making US subsidiary, or to investigate the reasons behind its poor
performance and report on the loss-making venture.

Company Chairman, Sir Richard Broadbent point blank refused to accept
amendments to the Directors' report that acknowledged the need to address
the challenges facing Fresh & Easy. He also rejected a call for a committee of
non-executive directors to review the current strategy and issue a report that
discloses the metrics and timeframe that the board will use to evaluate Fresh
and Easy's future performance.

Michael Zucker, Director of Retail Initiatives at the US union investment
advisers, Change to Win Investment Group, asked Sir Richard Broadbent, to
clarify publicly the true state of the US business. He asked him to explain the
company's strategy for recovery, and how its performance and success will be

Speaking at the Tesco AGM today, Michael Zucker called for a committee and
investigation into underperformance in the US. He cited dialogue with more
than half of Tesco's largest shareholders and said that what they wanted was
"just to know clearly where Fresh & Easy is going and how much it will cost to
get there."

Broadbent responded that the company would not be undertaking such
exercises and rejected the call for measurements.

Speaking after the annual shareholder meeting, Michael Zucker said:

"Tesco's response to the evidence presented to shareholders by Change to
Win Investment Group was in itself concerning and will have done nothing to
ease investor fears for the future of Fresh & Easy. Investors will no doubt be
troubled that the company seems calmly willing to continue making losses in
the US, as it has since the launch in 2007."

"We raised these issues now because of the urgency of Tesco's struggling
position in the UK, and Fresh & Easy's drawing on resources and diverting of
focus from Tesco's problems at home."

"The company keeps stating its confidence in Fresh & Easy's future, with little
qualification. The deadline for break even has been repeatedly pushed back.
We believe Fresh & Easy is suffering from a wide range of operational failures
and lack of clear strategic direction. In fact, the company recently announced
a major slow down in like-for-like store growth, a critical metric."

"All that we ask for from the Board is greater transparency and an
acknowledgement that there is significant investor anxiety about the
performance of the US business and the lack of a clear strategy to address its

A fortnight prior to the Tesco AGM, Change to Win (CtW), published a report
that gave insights into the reasons for continued poor results of Tesco's
faltering US subsidiary. It revealed frequently changing strategy, checkout
glitches, out-of-stock offer items, inadequate staffing levels, unsustainable
promotions, and instances of out-of-date goods and store uncleanliness.

The report, Taking Stock of Fresh & Easy: Mistakes and Operational Failures
at Tesco's US Venture, provided in-store observations from more than half of

Fresh & Easy's locations in all three states in which the chain operates.

Original source: Change to Win