Tesco has insisted it is committed to its US business, Fresh & Easy, despite investor concerns it is failing to deliver profits in the market.
During the company’s AGM on Friday (29 June), management fielded questions from investors who questioned the wisdom of Tesco’s foray into the well-developed and highly-competitive US market.
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However, the firm said it is committed to growing profits in the country.
“Fresh & Easy is improving as a business and I can assure you that it is receiving close attention from the executive team. We believe there is great value in the business and, if we get it right, an excellent stream of growth in future years,” CEO Philip Clarke insisted.
Fresh & Easy is yet to turn a profit but, in Tesco’s last financial year, which ran until 25 February, losses from its US division fell 17.7% to GBP153m (US$240.3m).
While the company has indicated it would pull out of the US if it found itself unable to improve profitabiliy, a source close to the situation told just-food that management feels it can now see “a path to profitability” in the market.
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By GlobalDataWhen Tesco delivered its preliminary results in April, it insisted that Fresh & Easy is “on track” to deliver a further “significant reduction in losses” during the current year. However, Tesco did concede that the timing of break-even “will now be later than our earlier guidance” as it focuses on delivering store level profitability, before pushing on with the expansion needed to “create sufficient scale” to cover overheads.
